Steady Votes, Shifting Expectations: What 2025 Means for the 2026 Proxy Season

The 2025 U.S. annual meeting season reinforced many familiar governance themes – board accountability, executive pay alignment, and shareholder rights – but unfolded against a more volatile political, regulatory, and stewardship backdrop. Voting outcomes on Say on Pay and key shareholder proposals remained broadly stable, but the context in which those votes were taken shifted meaningfully, with reduced transparency from major institutions, heightened scrutiny of ESG-related activity, and new legal and policy developments reshaping how issuers and investors interact.

For U.S. companies, the 2025 proxy season underscored the need for clear governance narratives, disciplined compensation design, and more deliberate engagement strategies heading into 2026.​

A more complex stewardship environment

The 2025 proxy season played out amid significant economic, political, and social volatility in the U.S., which amplified scrutiny of stewardship practices and corporate governance decisions. Regulatory updates, including revised SEC guidance on Regulation 13D/13G, led some large investors to be more cautious in engagements and less explicit in published voting policies, particularly on environmental and social topics. At the same time, legal and political pressure on ESG themes – from federal executive actions and state-level initiatives to court decisions testing fiduciary and antitrust boundaries – pushed both issuers and investors to recalibrate how each frames sustainability and governance priorities.​

This evolving environment is contributing to more fragmented voting behavior and less predictability for issuers. Large institutions are expanding proxy voting choice and pass‑through options, while stewardship teams at major asset managers continue to decentralize, making it harder for companies to rely on historical “house views.” Companies are therefore facing a more heterogeneous investor base, where expectations differ not only across regions but also within institutions, increasing the value of targeted, institution‑specific engagement.​

In this context, at least two large asset managers have announced a shift away from external proxy advisory firms for U.S. proxy voting, including one announcing it has adopted an in‑house, AI‑enabled platform to generate vote recommendations based on proprietary data and analysis. The move underscores growing scrutiny of proxy advisors and a desire among some investors to align votes more closely with internal views and client mandates. This type of transition may encourage other firms to reassess their reliance on external advisors over time but is unlikely to drive abrupt changes in market‑wide stewardship policies or near‑term voting trends for the 2026 season.

Stable voting, nuanced pressures

Despite this shifting context, overall voting outcomes remained broadly consistent with the 2024 season. Investors continued to prioritize board accountability, focusing on director performance, refreshment, and time commitments. U.S. Say on Pay support across the S&P 500 stayed high and essentially flat year‑over‑year, with average support just under 90 percent and failures remaining at a small minority of annual meetings.

Shareholder proposal dynamics also stabilized. Support levels for core governance topics – such as independent chair, special meeting rights, and majority voting – were broadly in line with recent years, with notable variations by topic but no wholesale investor retreat from these themes.​

Executive compensation and Say on Pay

Executive compensation remained central to the U.S. governance dialogue, even as headline Say on Pay support levels at large U.S. companies stayed robust. Across the S&P 500, Say on Pay outcomes showed close alignment between ISS and Glass Lewis recommendations and ultimate vote results, underscoring the continued influence of proxy advisors in shaping investor sentiment. Companies that failed to secure majority support typically shared familiar risk factors: sizeable one‑time awards, limited performance linkage in long‑term incentives, aggressive use of discretion, and insufficient disclosure around goal‑setting rigor and board responsiveness.​

S&P 500: Say on Pay Voting Trends

The 2025 season also highlighted growing investor emphasis on simplicity, transparency, and strategic coherence in pay design. Investors increasingly expect compensation programs to clearly support long‑term strategy and risk management, with performance metrics that are rigorous, understandable, and resilient to market volatility. At the same time, boards are being asked to reassess their use of ESG- and DEI‑linked incentives, ensuring that any such metrics are material, measurable, and grounded in business strategy. Against this backdrop, companies with normalized, predictable pay structures and clear, candid disclosure about the Compensation Committee’s decisions were better positioned to maintain support.​

Shareholder proposals and ESG recalibration

Governance- and sustainability-related shareholder proposals remained a significant feature of the 2025 U.S. proxy season. Within the Russell 3000, proposals on independent chair, special meeting rights, and majority voting continued to receive meaningful, though topic‑specific, levels of support, reflecting investors’ enduring focus on core governance rights.​ There was a slight decline in the average support for most climate and environmental proposals, while support for most social proposals – including diversity‑related proposals – remained fairly consistent with the previous year.

Average Shareholder Proposal Outcomes

At the same time, the broader ESG landscape for shareholder proposals is shifting in two important ways. First, anti‑ESG proposals continued to grow in number while attracting limited support and forcing issuers to articulate their sustainability strategies and governance frameworks more publicly. Second, regulatory and policy developments – such as the SEC’s evolving approach to Rule 14a‑8 and the announced shift to a more hands‑off posture on most no‑action requests – introduced new discretion and risk for companies deciding whether to omit proposals, increasing the potential for investor backlash where exclusions are perceived as overreaching.

Board diversity and sustainability oversight

Board composition and diversity expectations remained under scrutiny, even as institutional approaches became more nuanced. A number of U.S. investors that had previously published explicit quantitative thresholds for board gender diversity – such as minimum percentages or specific director counts – have removed those bright‑line expectations from their formal policies, even as non‑U.S. institutions continue to articulate clear thresholds, like a 30 percent or higher for gender representation. Proxy advisory approaches to board gender diversity also evolved; ISS has indefinitely paused its voting recommendations while Glass Lewis continued to issue negative recommendations for boards that do not meet diversity expectations, often flagging such recommendations, as diversity‑related in response to rising political sensitivity.​

More broadly, boards faced the challenge of overseeing sustainability in an increasingly politicized environment. Many companies revisited their ESG‑related disclosures, particularly around diversity, in response to external pressure, yet voting outcomes did not show widespread dissatisfaction with these shifts, suggesting that investors are differentiating between disclosure posture and underlying oversight quality. Effective boards concentrated on integrating sustainability into core governance structures, focusing on material risks and opportunities, and maintaining measured transparency that ties ESG initiatives directly to long‑term value creation and risk management.​

Investor engagement and emerging voting models

The 2025 season confirmed that sustained engagement remains a central tool for managing governance risk. U.S. issuers reported that large institutions were more reserved in disclosing their stewardship priorities and less willing to provide explicit guidance during one‑on‑one meetings in advance of the annual meeting, reflecting both regulatory constraints under revised 13D/13G interpretations and political pressures around ESG positions. In this environment, issuers that approached engagement as a year‑round exercise were better positioned to sustain investor support on contentious topics.​

New voting models also began to reshape the retail and institutional landscapes. On the retail side, the SEC introduced targeted no-action relief for a pilot program allowing individual investors to provide standing instructions to vote their shares in line with board recommendations, subject to specific guardrails – an initiative aimed at mobilizing historically unvoted retail positions but already facing class‑action litigation. On the institutional side, the expansion of pass‑through and voting choice structures by large asset managers is dispersing voting power among more stakeholders, reducing reliance on centralized stewardship teams, and introducing greater variability into future vote outcomes.​

Implications and priorities for 2026

Looking ahead to the 2026 proxy season, U.S. issuers should anticipate continued volatility, as regulatory and political developments heighten scrutiny of investors’ and proxy advisors’ voting approaches and stewardship decisions. In this environment, credibility, clarity of governance disclosures, robust engagement, and disciplined execution across board oversight, pay, and financially material sustainability matters will be decisive differentiators in the upcoming U.S. annual meeting season.​