Top Governance & Stewardship Trends for 2026
Subodh Mishra is the Global Head of Communications at ISS STOXX. This post is based on an ISS Governance Research report.
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Compensation and Say-on-Pay:
- There will be a slight increase in 2026 in the number of U.S. companies expected to demonstrate responsiveness to prior-year pay concerns. The percentage of companies with failed say-on-pay votes only slightly increased from the record low of 1.1% in 2024 to 1.2% in 2025. However, median pay support decreased from 94.9% in 2024 to 94.5% in 2025, and the percentage of companies that received between 50% and 70% support increased from 5.1% in 2024 to 5.5% in 2025. There were several high-profile failed votes in 2025 that will warrant a closer look this year.
- U.S. companies may receive limited shareholder feedback following the SEC’s new 13G and 13D filing guidelines. Following the new SEC filing guidelines for 13G and 13D forms, some investors have been wary of providing candid feedback on executive pay, particularly after a low say-on-pay vote result, due to the possibility of being reclassified as an “active” investor. As a result, in 2025 some companies disclosed in their proxy that they had difficulty receiving investor feedback following the SEC’s updates, and it is expected that more companies will have similar disclosures in 2026.
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- Transition pay arrangements are expected to be a focus in the 2026 proxy season. Following an unprecedented number of U.S. CEO changes in 2025, severance packages, sign-on bonuses, makewhole awards, and other transition pay issues are expected to play a prominent role in many executive compensation disclosures.
- Investors may continue to see increases in security-related perquisites in 2026. Over the last three years, the prevalence of security-related perks increased at a much larger rate than other common perks for S&P 500 CEOs, as many companies reevaluated the need for new or enhanced security protections for their top executives. The median value of security perks increased nearly 50% in the S&P 500 from FY22 to FY24, and this is expected to continue to rise in light of recent events sparking executive security concerns.
- Canadian CEO compensation levels continued to further tick up in 2025 from 2024, following a decline in 2023. Median CEO pay rose 17 percent in 2024, driven by annual bonus/STI payouts. Stock-based awards increased 10 percent. Say-on-pay resolutions saw three failed votes, down from five in 2024.
- While the push for market competitiveness, across Europe and the U.K. in particular, is reshaping executive remuneration practices amid an uncertain economic environment that complicates target setting, issuers and investors are expected to monitor potential pay escalation in 2026. More companies are leveraging global—often U.S.—peers in their pay benchmarks; however, questions remain as to whether proposals will meet case-by-case investor scrutiny regarding pay quantum and focus on realized pay. In light of many current global economic uncertainties, increased use of board discretion regarding pay outcomes is anticipated. Nevertheless, investor expectations remain unchanged: demands for ‘ex ante’ guardrails and transparent ‘ex post’ rationales.
- Remuneration trends in Europe are increasingly characterized by a greater reliance on discretionary pay to mitigate market volatility, as well as the reframing of diversity metrics within performance-based pay structures. Explicit diversity metrics are being reframed as leadership and cultural goals, particularly for companies with U.S. exposure. Boards are also placing renewed emphasis on discretion as a structured tool to adjust incentive outcomes in response to external volatility, and its transparent and disciplined use will remain a key expectation.
- Executive remuneration keeps evolving in the U.K. 2026 will likely see an increasing number of unconventional remuneration structures, including hybrid LTIPs, being put forward in the U.K. market, as companies respond to perceived competitiveness and retention concerns. Moreover, as many multinational companies increase their remuneration opportunities, this may in turn influence domestically based issuers, which will continue to benchmark against peers.
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Director Elections:
- The number of failed U.S. director elections decreased again in 2025. Only 33 directors in the Russell 3000 failed to win a majority last year, compared to 34 in 2024. Notably, three of those failed director votes were at companies in the S&P 500, whereas in 2023 and 2024, only one S&P 500 company experienced a failed director vote.
- Director election support remained robust in Canada. Support remained high at 96.9 percent for S&P/TSX Composite Index and 97.7 percent for S&P/TSX 60 companies in 2025. No director failed to secure majority support in 2025.
- In the U.K., it is anticipated that director elections will remain among the most controversial resolution type, with concerns regarding director independence, board diversity and accountability for remuneration decisions likely contributing towards dissent. Recent updates to U.K. cornerstone guidance documents may also see more issuers deviate from U.K. best practice with regard to board structure due to perceived increased flexibility.
- Tenure caps and independence tightening are forcing observable refreshment decisions across Asia, bringing committee leadership quality and succession planning into sharper relief.
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Diversity:
- Canadian CSA pauses diversity initiatives beyond gender diversity. The Canadian Securities Administrators (“CSA”) has paused work on proposed amendments to expand diversity disclosures beyond those relating to women.
- In the EU, enforcement of the board gender diversity deadline remains uncertain as June 30, 2026, approaches, due to uneven transposition of the directive by EU member states. The European Directive mandates that at least 40% of non-executive directors (NEDs) or 33% of all directors be of the underrepresented sex; however, inconsistent implementation across Member States creates uncertainty regarding enforcement. European average board gender diversity currently stands at approximately 30.5%, a slight increase compared to last year, with continued progress observed particularly in Eastern Europe.
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Environmental & Social (E&S) Topics:
- In 2025, the SEC’s issuance of Staff Legal Bulletin (SLB) 14M resulted in sharp increase of E&S shareholder proposal omissions in the U.S. The guidance made it easier for companies to justify exclusion of proposals on E&S matters. At the end of the year, a record high of 111 E&S-related proposals had been omitted, up from 45 in 2024 and 36 in 2023.
- The Trump administration’s executive orders on DEI impacted U.S. corporate disclosures of diversity initiatives. Many companies have scaled back or dismantled DEI initiatives, such as cutting back DEI-informed hiring policies and restructuring or eliminating employee resource groups. Many have edited or removed DEI-related policies and content from annual reports, proxy statements, and websites.
- Average support for E&S-related shareholder proposals in the U.S. continued to decline in 2025, a trend expected to persist into 2026. This decrease was likely driven by the prescriptive nature of some proposals, improvements in company disclosures, the rising number of so-called anti-ESG proposals with limited support, and the politicization of “ESG.”
- The impact of the SEC’s November 2025 decision to not respond to most Rule 14a-8 no-action requests will likely have a significant impact on E&S-related shareholder proposals at U.S. companies in 2026. It remains to be seen whether the number of E&S shareholder proposals that get on ballot will decline because companies now have the green light to omit proposals, or whether they will increase because companies will be more cautious in excluding proposals in order to avoid any potential lawsuits.
- Shareholder proposals at Canadian companies seek to tackle a variety of potential risks in 2026. Early 2026 shareholder proposals focus on AGM formats, director expertise, physical climate change risks, shareholder participation at AGMs, and audit firm rotation.
- Response to market competitiveness has altered the EU’s course on sustainability rules. As a result of the Omnibus directive (part of the Competitiveness Compass), EU institutions have reduced sustainability reporting requirements, narrowed the scope of affected companies, and delayed reporting disclosures for certain entities. Despite political agreements at the EU level, a degree of uncertainty remains for the 2026 reporting season, given the diverging local transpositions of the new sustainability rules.
- The total number of Say on Climate proposals (SoC) worldwide remains in the low thirties for the third consecutive year. In 2025, many Australian companies were subject to a SoC vote, as they typically submit such proposals to shareholder vote every three years.
- ESG reporting has moved from consultation to application across Asia. Board-approved sustainability information, clearer Scope 3 expectations, and phased assurance planning make disclosure integrity a governance matter.
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Governance-related Shareholder Proposals:
- In the US, more governance-related shareholder proposals appeared on ballots in 2025, and support rates increased over 2024. This is expected to continue to 2026. The most common topics in 2025 were special meeting rights, elimination of supermajority vote requirements and independent board chair. Topics with the highest support rates were elimination of supermajority requirements and board declassification. Proposals to eliminate a one-year holding requirement to exercise the right to call a special meeting failed to gain traction with shareholders.
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SEC Guidance Impacting Investor Engagement and Shareholder Proposals in the U.S., With More to Come for 2026:
- SEC announces it will object to voluntary exempt solicitation filings by a holder of less than $5 million in company shares. In a new Compliance & Disclosure Interpretation (CDI) issued in January 2026, the SEC stated that it will object to the filing of exempt solicitations by a holder of less than $5 million worth of shares. This restricts the use of a communication channel widely used by shareholder proponents and others to urge support for or against proposals.
- New Staff Legal Bulletin 14M resulted in more shareholder proposals being excluded in 2025, though impact was limited to E&S-related proposals.
- For 2026, SEC decides not to make no-action determinations. This is expected to lead to further decline in the proposal count. Chairman Atkins endorses new theory that Delaware law provides no basis for non-binding proposals; invites companies to seek a DE court ruling.
- U.S. Compliance & Disclosure Interpretation throws engagement into turmoil. Revised SEC guidance suggests that 5% shareholders may lose their right to be treated as passive investors (and therefore lose their eligibility to file on Schedule 13-G) if they condition proxy votes on actions taken by the company. With large shareholders now reluctant to give candid feedback on their pain points, companies are left in the dark when deciding how to respond to a failed vote – and when deciding how to respond to an activist campaign.
- SEC is making it a “priority” to eliminate the quarterly reporting requirement. Unclear how many companies will take advantage of the new flexibility to report less often, or how investors will respond.
- SEC reverses course on mandatory arbitration of securities law claims. Chairman Atkins encourages Delaware to rethink its prohibition of mandatory arbitration. Securities class actions could become a thing of the past.
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U.S. Inter-state Battle for Incorporations:
- 36 U.S. issuers proposed a reincorporation in 2025 (including failed or withdrawn proposals), double the number in 2024. More than half choose Nevada as their new destination. Delaware saw the greatest loss, but more companies moved into Delaware than into any other state except Nevada.
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M&A and Activism:
- There were 27 proxy contests for board seats in the U.S. in 2025, a decrease from 32 in 2024. But, average market cap increased. Despite the year-over-year decrease in the headline number, the median market cap of targeted companies increased nearly 175 percent to over $400 million. Moreover, the universe of campaigns was particularly dynamic, featuring marquee contests at blue chip companies and several high-profile vote no campaigns.
- The number of proxy contests for board seats in Europe reached an all-time high of 31. Of this record number, 18 took place in the U.K., where Saba Capital Management ran a coordinated campaign at seven investment trusts early in the year. The U.K. has only hosted more contests on one occasion – in 2009, when there were 19.
- Activism remained prominent in Canada, but the volume of proxy contests getting to a vote decreased year-over-year as several were averted by last minute developments.
- In the U.S., M&A volume accelerated in 2025, particularly in the latter half of the year. However, not all deals were welcomed by shareholders, and there were several high-profile contested transactions during the year.
- There were several notable hostile takeovers of Italian banks in 2025, and contested M&A also remained a theme in the U.K.
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Virtual Shareholder Meetings
:- Following strong investor opposition, virtual-only meeting formats are declining in popularity among some Canadian companies. There is a noticeable shift away from virtual-only AGMs in Canada, expected to continue in 2026. Forty-three percent of S&P/TSX Composite Index companies held virtual-only meetings in 2025, down from 54 percent in 2024.
- The U.K. Government previously indicated that, alongside the creation of a new regulator to replace the Financial Reporting Council, legislation would clarify the legality of virtual-only meetings. However, in January 2026, the Government scrapped its Audit Reform Bill. Nonetheless, it stated that it would still press ahead with plans to allow virtual AGMs. This, alongside the recent publication of GC100 guidance on the subject, may encourage an increasing number of U.K. companies in 2026 to amend their articles to allow for meetings to be held exclusively by virtual means.
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Regulatory, Competitiveness and Other Developments:
- Recent changes to U.K. regulations and guidance will likely see some companies adapt their approaches. This includes Provision 29 of the U.K. Corporate Governance Code, which comes into force for financial years beginning in 2026. The provision recommends that boards disclose a formal declaration on the effectiveness of material internal controls, which in turn will likely lead to greater consideration and more disclosure surrounding risk management and internal controls frameworks. In addition, we may see some companies listed in both the U.K. and Ireland begin to deviate from the norms of the U.K. market, as more choose to adopt the principles of the Irish Corporate Governance Code.
- Both sustainability and AI will continue to be key governance priorities in the U.K. market. 2026 will likely see further consolidation in relation to sustainability, as part of a broader regulatory drive for consistent, comparable, and actionable reporting. For AI, the next year may see more regulation. The planned U.K. AI Bill will likely shape corporate governance practices around AI, with regulators and boards focusing on transparency, accountability, and ethical oversight, as AI becomes more embedded in business processes.
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Other Developments in Asia
- Meeting-season compression has not materially eased in key Asian markets, reinforcing the need to judge issuer readiness ahead of formal compliance dates.
- The issuer universe across Asia is expanding structurally, driven by venture-backed, founder-led IPOs in India, renewed listing momentum in Hong Kong including dual-listed Mainland Chinese “new economy” companies, and a secular broadening of ASEAN public markets. The sum of these pan-regional dynamics is an ongoing deepening of the governance perimeter and intensifying stewardship demands through the remainder of the decade.
- Across Asia ex Japan, governance practice is transitioning from frameworks to facts. investors want evidence-based disclosure, credible readiness signals, and observable oversight capacity.
- Developing Asia-specific governance frameworks around AI implementation (post-fact) and ESG (including explicit links to remuneration and data disclosure requirements along supply-chains) strongly point to Asia ex-Japan forging unique governance and stewardship profiles in coming years.
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