Executive Compensation in 2025: Navigating the Say-on-Pay Landscape

Executive compensation—particularly Say on Pay—has become a global benchmark for corporate accountability, transcending borders and industries. In 2025, shareholder meetings highlighted just how central trust, transparency, and performance-based leadership have become to the compensation conversation. Despite the continued strong shareholder support for pay packages, it remains an area of keen focus and intense scrutiny. The narrative around executive pay has evolved in recent years and is now more strategic, as companies are making greater efforts to demonstrate how their compensation programs support long-term strategy.  While compensation issues may not be core to an activist campaign, poor performance coupled with a low Say on Pay vote can attract the attention of activists, media, and shareholder proponents.

This year’s proxy season unfolded amid significant regulatory and market changes. Revised SEC guidance on Regulation 13D/13G tightened how major institutional investors engage with issuers, making it challenging for issuers to gauge investor expectations on their compensation programs.  Meanwhile, CEO pay across the Russell 3000 continued to rise—driven by strong equity markets and earnings—putting executive compensation under a magnifying glass. Companies that failed to secure majority support for pay packages faced heightened reputational risk, media scrutiny, and investor skepticism. At the same time, investors demanded greater simplicity in pay design, more robust performance-based incentives, and clearer disclosures, especially around metrics, goal rigor, and the Compensation Committee’s decision-making process.

We believe there are six ways boards and management teams can ensure their executive compensation programs earn shareholder trust and withstand today’s heightened scrutiny:

1. Prioritize Transparency and Simplicity

Boards should streamline pay designs, making them easy for investors to understand. Clear, concise disclosures about how pay aligns with performance and long-term value creation are essential. Avoid overly complex structures that can obscure the link between compensation and results.

2. Strengthen Performance-Based Incentives

Investors continue to favor robust, performance-based equity incentives. Ensure that performance metrics are rigorous, transparent, and aligned with shareholder interests—especially in the context of geopolitical and market volatility. While long-term total shareholder return (TSR) alignment should remain a central focus, incentive structures should support a company’s long-term strategy, motivate appropriate risk-taking and able to endure market dynamics.

3. Scrutinize Discretionary and One-Time Awards

Discretionary, one-time, or retention awards are under sharper scrutiny than ever. Boards should be prepared to clearly justify these awards, demonstrating how they support long-term value rather than short-term retention or windfalls.

4. Reassess ESG and DEI Metrics

As expectations shift, boards should carefully evaluate the inclusion of ESG and DEI metrics in incentive programs. Ensure these metrics are material, measurable, and genuinely linked to company strategy and stakeholder value.

5. Address Executive Security Benefits Thoughtfully

With renewed attention on executive security benefits, boards must balance necessity and transparency. Disclose the rationale for such benefits and ensure they are proportionate to actual risks.

6. Prepare for Real-Time Accountability

Say-on-Pay votes are now real-time referendums on board oversight and management execution. Boards must treat these votes as critical feedback, using outcomes to inform future compensation decisions and stakeholder engagement strategies.

In Conclusion

Executive compensation is no longer just about pay—it’s about trust. When boards get it right, they send a powerful message: leadership is aligned, performance is rewarded, and shareholder value is prioritized. In today’s environment, proactive, transparent, and strategic compensation oversight is essential for maintaining credibility and securing investor support.