From Say-on-Pay to the Boardroom: Making Off-Season Engagement Count

SAY-ON-PAY SERIES
This is the final article in our summer series on reading the 2026 say-on-pay results, preparing for off-season shareholder engagement, and bringing investor feedback into the compensation committee’s fall planning cycle.

By late fall, most companies have moved on from the annual meeting and are deep into year-end planning. That makes one important window easy to miss: late Q4 and early Q1 are often the best times for substantive conversations with major shareholders, ahead of the proxy season.

This window also falls at a useful point in the compensation committee’s calendar. Some 2026 compensation decisions are complete and will soon appear in the proxy, while the Committee may still be working through incentive design and other critical decisions for 2027. The same engagement can provide context for what shareholders are about to see and give the Board additional perspectives before its decisions are finalized.

Companies should generally avoid asking shareholders to pre-clear a special equity grant, incentive design for the coming year or other Board action. Instead, shareholder engagement gives investors an opportunity to communicate their priorities and explain how they are likely to assess a particular issue. The compensation decision should stay with the Board. The value of engagement is understanding how investors will evaluate it.

Start before the meeting

Build the agenda around what the company needs to learn.

Useful say-on-pay analysis identifies which major holders changed their votes, where opposition concentrated and whether supportive investors raised concerns despite voting “For.” Those findings help determine where the next conversation should go.

If the Committee expects to revisit an incentive metric, consider an off-cycle retention action or address an executive transition, shareholder views may be relevant before those discussions are complete. Where a significant 2026 action has already occurred, engagement can provide business context and help the company understand what shareholders are likely to focus on when the proxy is filed.

Sophisticated stewardship teams know roughly when compensation committees make their decisions. A meeting scheduled after the design work is effectively complete can feel more like a courtesy call. Investors know when their input can influence the Committee’s thinking.

For most companies, outreach should begin with roughly the 15 to 20 largest investors, although this will vary for each issuer based on its shareholder register. That group will often represent more than half of the company’s outstanding shares, with adjustments based on ownership profile, voting history and the issues to be discussed.

Preparation should be investor-specific: how the institution voted, what its published policies say, what it raised in prior engagement and who inside the firm will actually drive the voting decision. At some institutions that is the stewardship team. At others, portfolio managers carry real weight. The company’s own roles should be equally clear, including who will address compensation, governance and the broader investor relationship.

A review of the latest ISS and Glass Lewis perspective on the company is also suggested, particularly after an adverse recommendation. Know it, but do not build the meeting around it. The purpose is to understand the shareholder’s own reasoning.

Outreach should include shareholders that voted “Against” but also major shareholders that supported say-on-pay. A favorable vote can coexist with meaningful concerns about an individual compensation action or broader governance issue. Supportive shareholders may provide an early indication that an issue could become more consequential if it persists.

Director participation should be purposeful. A Committee member or other independent director can add real value when a shareholder has asked for Board participation or the discussion turns to Board judgment or accountability. When a director joins, investors expect to hear the Board’s rationale directly and in the director’s own words. Redirecting those questions to management undermines the value of having the director participate in the first place.

Spend more time listening

Companies prepare carefully for these meetings and care should be taken to ensure that the preparation does not work against them. A meeting that turns into an IR presentation, or an apology tour for a decision the Committee still believes was right, leaves little room to hear anything unexpected.

A rough test: if the company has been talking for more than half the meeting, the agenda was too full.

Good listening still requires context. Shareholders may need to understand why discretion was used, why an incentive plan is structured a certain way or why the Committee approved an unusual compensation action. Participants should also be prepared for the conversation to move beyond executive compensation. Stewardship teams frequently cover a broader range of governance and Board matters, especially in the off-season.

The compensation discussion itself should focus on the issues that are actually consequential for the company. The relevant issue may be goal rigor, use of discretion, a retention award, an executive transition or an unusual pay outcome. The company should provide enough business and strategic context to explain why the Committee made its decisions, without trying to defend every feature of the program. A generic walk-through of compensation practices is unlikely to surface much that the Board does not already know.

Similar-looking votes can reflect very different judgments. An investor applying a hard voting-policy constraint presents a different issue from one expressing a preference about plan design. The company needs to understand how strongly the view is held and whether it could eventually affect support for directors.

Those distinctions rarely emerge from a presentation. They come from asking follow-up questions and giving the investor room to answer them.

The meeting also should not end with a commitment to make a change. Management’s job is to understand the feedback accurately and bring it back to the Committee or Board. Different investors will have different views, sometimes directly conflicting ones.

Close the loop

The Board does not need a transcript of every investor meeting. Feedback should be synthesized to a small number of themes and what they mean. A concern may point to the compensation design itself, to disclosure or process, or to an issue that could become a significant voting risk. Other feedback may simply reflect a difference in philosophy between the investor and the Board.

The themes should be weighted. Investor significance is important, as is the strength of the view, how consistently it surfaced across holders and how directly it relates to the company’s circumstances. A firmly held concern from a top-five holder deserves different attention from a passing preference expressed by a smaller shareholder. Repeated feedback across several major holders also sends a different signal than one driven largely by a single investor’s voting policy.

Not every concern calls for a response. A shareholder may prefer an approach the Committee has already considered and rejected. Directors are better served hearing that distinction plainly than seeing every comment framed as a problem to be solved.

The next proxy should demonstrate how shareholder engagement informed the Committee’s process. Specific disclosure about the issues raised and how the Committee considered them says more than a general statement that the company values shareholder input.

By the time the next compensation decision reaches the Committee, directors should understand how the company’s significant shareholders are likely to view it and why. The next say-on-pay vote is a poor time to learn that for the first time.