New Priorities, New Pressures… and How to Navigate Them

The 2026 proxy season marked a departure from standardized governance playbooks, shaped by an increasingly fragmented shareholder engagement and investor voting environment. Greater regulatory flexibility, evolving investor expectations and the adoption of AI-enabled analytical tools have elevated the importance of proactive investor dialogue, clear and decision-useful disclosure and strong governance oversight.

The Defining Themes of the 2026 Proxy Season

The Era of Deregulation

The SEC’s deregulatory agenda, which includes shareholder proposal “no-action” reform and proposed changes to periodic reporting, filer status and disclosure requirements, creates greater expectations for board judgement, governance process and credibility.

Deregulation is generally not viewed by institutional investors as a reason to weaken governance practices. Many expect to continue to evaluate boards against their own governance principles, rather than regulatory requirements.

The Proxy-Advisor Reset

Following the December 2025 Executive Order targeting proxy advisory firms, the governance world continues to monitor the declining influence of ISS and Glass Lewis as investors strengthen internal proxy analysis capabilities and third-party resources emerge to fill the gap.

As investors move toward more nuanced, case-by-case voting policies, outcomes are becoming less predictable and heightening the need for proactive engagement to understand key voting drivers.

“DExit” Puts Shareholder Rights in the Spotlight

Reincorporations out of Delaware have accelerated, as more states compete to attract corporates. The trend is expected to continue, with investors closely scrutinizing the rationale and potential impact on shareholder protections.

Support margins were relatively narrow in several cases, underscoring the importance of shareholder engagement to build investor support ahead of a vote.

9 of 11 reincorporation proposals to either Texas or Nevada passed in 2026.

Governance Proposals Outpace E&S Proposals

Environmental and Social proposals continued to decline in 2026, accounting for 40% of proposals voted on, down 10 percentage points from 2025. Zero E&S proposals received majority shareholder support.

Meanwhile, proponents shifted their focus to traditional governance topics, which represented 60% of proposals voted on, up 10 percentage points year-over-year. Prevalent topics include requiring an independent Board Chair, the shareholder right to call a special meeting and act by written consent.

~13% decline in shareholder proposals in 2026 vs. 2025.

Say-on-Pay Support Continues to Rise

One-time and mega-grants are on the rise, alongside increasing investor tolerance for irregular and potentially contentious executive compensation programs, as evidenced by the decline in failed say-on-pay votes.

~40% reduction in failed say-on-pay votes

In the Russell 3000 and S&P 500, only 22 companies failed say-on-pay, compared to 37 in the same period last year.

As investors take a more case-by-case approach to compensation decisions, companies should provide nuanced disclosure and pursue proactive shareholder engagement.

Multiple Sustainability Reporting Formats Emerge

Companies are adopting a wider range of sustainability reporting formats to balance evolving legal and reputational risks. While some continue to publish comprehensive, narrative-driven reports, others are shifting to exclusively web-based disclosures or compliance-focused reporting aligned with regulatory requirements.

Regardless of format, investors continue to expect transparent, durable disclosure of material non-financial risks, governance practices and risk mitigation strategies.

65% decline in Fortune 500 participation in HRC’s Corporate Equality Index.

Note: All data represents the period from January 1, 2026 to June 30, 2026.

What We're Watching Into 2027 and Beyond

Forthcoming SEC Filer Reform and Executive Compensation Overhaul

The SEC has proposed filer status reforms for non-accelerated filers that would scale back disclosure obligations and lower compliance costs, including for executive compensation. More comprehensive compensation disclosure reforms are expected later this year.

Greater Focus on Director Performance and Accountability

As scrutiny intensifies, investors are becoming more cautious in taking positions on E&S proposals, while increasingly using director votes to signal governance and oversight concerns.

The “Industrialization” of AI Narrows the Knowledge Gap

AI is making shareholder meetings more sophisticated, allowing investors to digest filings and benchmarks in minutes, identify risks earlier and move from “discovery” to validation faster. Companies should expect sharper questions, deeper scrutiny and decreased tolerance for vague or inconsistent answers.

Extended In-Season Shareholder Engagement Window

AI enables investors to prepare and engage earlier, particularly as proxy advisor influence continues to diminish. This longer engagement window comes with both added risk and opportunities for companies in contested situations, with investors having more time to evaluate, scrutinize and engage.

What To Do Now

1. Strengthen Your Disclosure Narrative: Audit for risk-tolerant language and gaps in AI, pay rationale and strategy, applying special attention to the implied sentiment of the disclosure and consistency of narratives across all public channels.
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2. Prepare for AI powered Meetings: Prepare for more detailed investor questions on governance, executive pay, benchmarking and financial performance as engagement meetings are increasingly supported by in-depth AI research.
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3. Proactively Evaluate Your Pay Program: Despite the surge in off-cycle awards and mega-grants, best practice remains engaging investors early to discuss any contemplated special awards or in-flight program changes, particularly as investor and company views on performance-based compensation and what constitutes as “long-term” continues to diverge.
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4. Prioritize Off-Season Engagement: Get ahead of 2027 vote concerns by understanding how your top holders’ voting policies are evolving and how those changes may affect you going forward. Prioritize dialogue over deck flips, ask investors targeted questions and stay attuned to shifting priorities.
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5. Board Preparedness for Active and Institutional Investor Meetings: As large institutional investors increasingly vote with management, contentious outcomes are often determined by active shareholders. Tailor engagement strategies for both active and passive holders, with participating directors prepared to address each group’s priorities and articulate the board’s oversight of near- and longer-term strategy, as well as financial performance and real time controversies.

The companies best positioned for 2027 will not be those that disclose the most, but those that engage proactively and intentionally, with a clear story, the right data and a plan for navigating a more fragmented, AI-driven investor landscape.