Dive Brief:
- While regulatory shifts have complicated the shareholder engagement and proposal process, corporate governance-related submissions are expected to “remain a focal point of shareholder activity” this proxy season, according to a recent report from The Conference Board.
- However, the report noted that individual “voting outcomes are becoming less predictable as decision-making grows more contextual.” Both asset managers and proxy advisers are shifting their attention to “issuer-specific facts, disclosure quality, and demonstrated responsiveness” and relying less on policy frameworks, the report said.
- The current proxy season is taking place amid changes to Securities and Exchange Commission policies and guidance on shareholder proposals that have “materially reshaped the shareholder proposal process,” according to The Conference Board, who penned the report in collaboration with ESG data analytics firm ESGAUGE.
Dive Insight:
The number of shareholder proposals filed at S&P 500 and Russell 3000 companies both fell in 2025, after a record year in 2024. The March report noted that “companies now face a proxy environment defined less by volume and more by discretion, legal complexity, and evolving investor expectations.”
The number of proposals filed this proxy season “may remain subdued,” but there is expected to be increased scrutiny on the design of submissions, asset managers’ engagement practices and exclusion decisions, The Conference Board said.
Corporate governance and executive compensation-related shareholder proposals were the most likely to receive shareholder support in 2025. Corporate governance proposals have received the highest average shareholder support for the past three years, while support for environmental, social and human capital management-related proposals have seen support decline since 2023, per the report’s findings.
Average shareholder support for governance proposals at Russell 3000 companies was 39% in 2025, stagnant from 2024. Executive compensation proposals were the only topic that saw its average support rise year over year in 2025, with such proposals receiving 16% average shareholder support at Russell 3000 companies, up from 14% in 2024. Average support for executive compensation proposals is still below its 2023 level of 22%, according to the report.
The support for governance and executive compensation proposals reinforces “investor prioritization of issues perceived as directly tied to board accountability, pay alignment, and oversight effectiveness,” the report said.
This proxy season outlook was also backed by Russell Reynolds Associates and Rutgers Law School’s Center for Corporate Law and Governance, alongside The Conference Board and ESGAUGE. To develop the report, The Conference Board reviewed recent management and shareholder proposals at S&P 500 and Russell 3000 companies in a webinar and also spoke to chief legal officers and corporate secretaries “at leading companies in a Chatham House Rule session, the report said.
Investors are expected to continue to favor narrowly-tailored governance proposals focused on “clearly articulated governance gaps” that are “aligned with prevailing market norms,” the report said. Executive compensation filings are seen as a “secondary channel for shareholder engagement on pay issues,” The Conference Board said.
The regulatory changes to the engagement process initially caused large asset management firms like BlackRock and Vanguard to pause all engagement meetings. The policy change is still leading to scaled-back engagement, leaving “many asset managers, especially index funds, reluctant to press companies on corporate governance or other policy matters, closing a key channel of communication,” according to a separate report Diligent Market Intelligence released last week.
The SEC also announced in November that it would not weigh in on most no-action requests from companies this proxy season. A pair of activist investor groups recently challenged those changes in court, but, in the meantime, “companies now have far greater latitude to decide which proposals should make their way onto their proxy ballots,” Diligent’s report said.
Diligent noted, however, that “early attempts at navigating this discretion have seen proponents take exclusions to the court, sometimes leading to settlements or the proposal going on the ballot.”
Under the revised no-action rules, companies have “fewer procedural guardrails and diminished opportunities for informal SEC intervention” and should “exercise greater caution” when there are close calls on whether to exclude a proposal, according to The Conference Board report. Companies that strengthen their internal legal and governance review processes for shareholder proposals and engage earlier with proponents will be better able to limit their risks of regulatory, litigation and reputational risks, the report said.
