Overview

In what promises to be a groundbreaking year, the 2026 proxy season will play out alongside an ambitious SEC regulatory agenda with a focus on supporting innovation, capital formation, market efficiency and investor protection.

The SEC’s near-term priorities include establishing a regulatory framework for crypto assets, expanding investor access to private markets, easing compliance burdens, re-anchoring disclosures in materiality, and reforming securities litigation to curb frivolous lawsuits¹.  The Commission is additionally fast-tracking a rule change to allow public companies to switch from quarterly to semi-annual earnings reporting.

The proxy voting landscape is also being reshaped with the goal of “depoliticizing” shareholder meetings and restoring their focus to core corporate matters.  This will include an SEC proposal this spring to modernize Rule 14a-8 and, per a recent White House executive order (EO), consideration of new rules to regulate proxy advisory firms.

While these initiatives will not directly impact 2026 annual meetings, other trends and developments will inform contemplated regulatory actions and recast the company/shareholder dynamic in the future:

Much ado about omissions: For this year’s proxy season, the SEC made two significant regulatory shifts which will give companies more control over their annual meeting agendas: largely suspending its substantive review of no-action requests in favor of company discretion and restricting small investors from using Notices of Exempt Solicitation to promote activist campaigns.  Despite the outcry—and even lawsuits—from some shareholder proponents, companies have been judicious in their exclusion decisions, which are tracking in line with the proportion of proposal omissions in 2025.

Shareholder proposal volume shrinks:  After peaking in 2024, the overall volume of shareholder proposal submissions is continuing to contract, with environmental and social (E&S) filings at their lowest level in 10 years.  Proponents held back this year due to steadily declining support levels and last year’s SEC guidance—Staff Legal Bulletin (SLB) 14M— which eliminated the significant social policy override that had previously made it difficult for companies to exclude proposals. Filings of traditional governance resolutions remain robust with this year’s initial votes drawing strong investor support.

Less predictable voting outcomes:  Companies will find it increasingly challenging to forecast proxy votes and gauge shareholder sentiment due to fractured voting and limitations on investor engagements.  As a result of the SEC’s revised guidance last year regarding Schedule 13G eligibility, investors’ engagement discussions have become more circumspect and their proxy voting policies have become more opaque in terms of their voting intentions.  In addition, the Big Three—BlackRock, Vanguard and State Street–have split their stewardship teams which may lead to a divergence in their voting policies over time.  They are also expanding their voting choice programs, which give their clients the ability to follow either in-house or third-party voting policies.

Diminishing proxy advisor influence:  In the face of mounting regulatory and legal pressure at both the federal and state levels, Institutional Shareholder Services (ISS) and Glass Lewis are rethinking their business models in ways that will lessen their influence on shareholder meeting votes. This will become more pronounced in 2027 when Glass Lewis retires its benchmark voting policies and migrates its clients to customized guidelines reflecting their individual stewardship priorities.  Several major asset managers are also distancing themselves from the proxy advisors by bringing their proxy research, data collection and voting in-house, aided by artificial intelligence (AI) technology.

Retail votes will become more consequential:  Individual investors will gain in prominence in proxy votes and corporate communications as a result of pass-through and auto-voting programs.  This season, Exxon Mobil will debut its retail voting program, which allows its retail shareholders to automatically cast their votes in line with the board’s recommendations. Broader adoption by the corporate community could substantially diminish the influence of shareholder activists and special interest groups.

This report delves further into these and other key issues that will impact the 2026 proxy season and beyond.

Shareholder Proposal Omissions

Shareholder proposal omissions are being closely tracked this season following the SEC’s announcement last fall that, due to resource constraints following the government shutdown, it would not be adjudicating no-action requests through September 2026, other than those based on Rule 14a-8(i)(1) where the proposal is not a proper subject for shareholder action under state law.  Companies are at their own discretion in deciding what resolutions to leave off ballots based on the provisions of Rule 14a-8, prior published guidance, and/or judicial decisions.

The SEC additionally revised its Compliance and Disclosure Interpretations (C&DIs) on proxy rules and schedules, stating that it will object to “voluntary” Notices of Exempt Solicitation that are filed by persons owning less than $5 million of the company’s shares, primarily to generate publicity for their shareholder resolutions and “vote no” campaigns.  This has forced shareholder activists to come up with alternative communication channels to share their views on proxy ballot items with other investors².

Omission Trends

Overall, companies have been cautious in their exclusion decisions to avoid investor backlash, which could take the form of opposition to directors, negative publicity and even litigation.  Over half (58%) of the announced omissions were governance proposals, largely sponsored by John Chevedden, of which about one-third (35%) were flagged for procedural deficiencies and 19% were considered substantially implemented, primarily due to a management proposal on the ballot that essentially fulfilled the request.  Nearly half (42%) of the E&S resolutions scheduled for exclusion were regarded by companies as ordinary business (see Table 1).

No company has yet sought no-action relief based on the SEC’s state law carve-out.  Last fall, SEC Chair Paul Atkins suggested that Delaware law does not accord shareholders with a fundamental right to submit precatory proposals³¹.  If a company obtains a legal opinion that precatory proposals are not a proper subject for shareholder action under state law, the SEC staff will likely defer to that position.

Atkins also said that a shareholder proposal that does not meet Texas’s eligibility requirements may be excludable under Rule 14a-8(i)(1).  Last year, the state amended the Texas Business Organizations Code (TBOC) to allow Texas corporations that opt into Section 21.373 to restrict the submission of shareholder proposals to a single or multiple holders of at least $1 million in stock or 3% of the voting shares, whichever is less.  This ensures that shareholder proposals carry the backing of investors with significant, sustained financial interests in the company.  Several companies—including Forward Industries and Texas Capital Bancshares–are availing themselves of this measure as part of their moves to Texas.  At its April 21 annual meeting, Texas Capital Bancshares will hold a separate advisory vote on whether to be governed by the provision.

Investor and Proxy Advisor Reactions

Through April 10, none of the omissions sparked any strong repercussions from investors or proxy advisors in terms of opposition to directors at annual meetings (see Table 2).  Glass Lewis indicated that it will not raise concerns regarding technical omissions, such as submission timeliness and proof of stock ownership, but it will review other types of exclusions case by case.  ISS said that it will not substitute its judgment for that of the SEC in determining whether a proposal is properly excludable under Rule 14a-8.  However, it expects companies to provide clear and compelling reasons for ordinary business and substantial implementation exclusions in their proxy statements³. Failure to do so may be regarded by ISS as a governance failure, which will be flagged in the proxy report or, in rare circumstances, result in a negative ISS recommendation against one or more agenda items, such as the election of directors.

Lawsuits Emerge

Some shareholder proponents are resorting to litigation to keep their proposals on proxy ballots or, in the case of the Interfaith Center on Corporate Responsibility (ICCR) and As You Sow, to block the SEC’s continued implementation of its no-objection policy⁴ ICCR also posted on its website examples of “egregious” unilateral omissions.⁵

Of the six lawsuits filed against companies, three have settled.  AT&T and PepsiCo reached agreements with the New York City Retirement Systems (NYCRS) and the People for the Ethical Treatment of Animals (PETA) Foundation, respectively, not to exclude their resolutions on workforce diversity and animal welfare.  Axon Enterprise also settled a lawsuit filed by the Nathan Cummings Foundation by agreeing to provide detailed annual disclosure of its direct political spending over the next five years.

Still pending are lawsuits against BJ’s Wholesale Club, Chubb, and UnitedHealth Group, which plan to omit resolutions filed, respectively, by the New York State Retirement Systems (NYSCRF), As You Sow and ICCR member Fonds de Missions.  The proposals, which were deemed to constitute ordinary business, deal with deforestation risk, subrogation claims against fossil fuel companies, and the impact of acquisitions on the healthcare system.  In late March, a D.C. federal judge denied As You Sow’s request for a preliminary injunction on the basis that it did not show any likelihood of prevailing on the merits.  However, the judge also declined to dismiss the complaint at this early stage⁶.
The legal actions appear to be having a chilling effect on some companies’ omission decisions.  A number of firms, such as Goldman Sachs Group and Huntington Ingalls Industries, have chosen to include shareholder resolutions in their proxy materials, notwithstanding their view that they could have been properly excluded.⁷.

State Street Investment Management (SSIM)–formerly State Street Global Advisors (SSGA)–has published its 2026 global voting policy updates which are effective April 2026¹.  The material changes, which are discussed below, include embedding financial performance into certain policies, streamlining the framework for evaluating shareholder proposals, and disclosing the guidelines followed by the asset stewardship team when engaging with U.S. public companies.

Financial performance

SSIM has incorporated financial performance, based on total shareholder return (TSR) relative to the company’s Global Industry Classification Standard (GICS) sector, into its assessment of board composition, board oversight of risks and opportunities, and executive compensation. It has removed board diversity factors from its discussion of board quality and composition.  It has also eliminated its section on board oversight of geopolitical risk.

Evaluation of shareholder proposals

In evaluating shareholder proposals, SSIM will consider whether adoption would promote long-term shareholder value in the context of its core governance principles:  effective board oversight, quality disclosure and shareholder protection.  It has removed its previous factors for supporting a shareholder proposal which, in the case of disclosure requests, included satisfying SSIM’s detailed disclosure criteria on issues such as climate change; nature and biodiversity; human capital management; diversity, equity and inclusion (DEI); human rights; and political activities.

Shareholder rights

SSIM has removed its explicit preference for a 25% or less ownership threshold for shareholders to call a special meeting or act by written consent.

Engagement policy

SSIM has added an appendix with guidelines on how its asset stewardship team will conduct engagements with U.S. public companies.  In keeping with last year’s SEC guidance on passive/active investor status, SSIM’s discussion parameters underscore that it does not seek to influence or change control of any issuer, including the following:

• It will not discuss how it intends to cast its vote on any particular ballot item or its rationale for any vote it has made.
• It will not dictate or pressure companies to adopt or change any policies or fundamental business choices.
• It will not engage in discussions that explicitly or implicitly suggest contingent voting or divestment if a company does not adopt SSIM’s viewpoint on a particular item, or that suggest that any particular factor, policy or practice is dispositive in its engagement or voting decisions.

SSIM expects its U.S. portfolio companies to set engagement meeting agendas.  The stewardship team will be in “listen-only” mode during discussions of the following topics with either companies or investors soliciting SSIM’s votes in connection with contested shareholder meetings, “vote no” campaigns, or shareholder proposals:

• Contested director elections
• Adoption of a climate transition plan
• Adoption of specific targets for emissions reduction
• Disclosure, reduction or adoption of a policy on Scope 3 emissions
• Changes to the company’s capital allocation

SSIM further states that it does not apply, nor will its stewardship team discuss, specific targets or thresholds of gender, racial or ethnic diversity in connection with U.S. portfolio companies.

Proxy voting process

In its overview of its asset stewardship program, SSIM deleted references to its use of Institutional Shareholder Services (ISS) to facilitate the execution of its proxy votes, including acting as its proxy voting agent, assisting in applying SSIM’s voting policy, and providing research and analysis relating to general corporate governance issues and specific proxy items. 

Introduction

2025 marked a decisive shift in the UK investment trust landscape. What began as a prolonged period of wide discounts evolved into a sustained test on balance sheets, permeating into corporate governance, as boards were increasingly required to demonstrate that the closed-ended structure continued to serve shareholder interests.

At the centre of this shift was a series of high-profile activist campaigns led by Saba Capital, whose actions since late 2024 have reshaped expectations around board accountability, corporate actions, and shareholder engagement across the sector.

Our analysis examines these developments through a governance, M&A, and activism lens, highlighting how shareholder expectations have evolved and why boards are increasingly judged on their ability to deliver tangible outcomes within the closed-ended structure. Alongside this, Nepean’s contribution provides a complementary perspective on the strategic communication challenges facing boards, particularly in the context of the Saba campaigns.

Activism in Focus: Saba Capital’s Campaigns (Late-2024 to 2025)

Since the end of 2024, Saba Capital has mounted coordinated campaigns across multiple UK investment trusts, seeking outcomes ranging from board change and enhanced discount-control mechanisms to structural reform, including mergers, wind-ups, or conversion to open-ended vehicles. While many of Saba’s formal resolutions were ultimately defeated, the broader impact of these campaigns has been significant. The activism demonstrated that:

• large shareholders are prepared to challenge the legitimacy of the closed-ended structure where discounts persist;
• board composition, tenure, and responsiveness are now regularly challenged; and
• corporate actions once considered exceptional are increasingly viewed as normal.

For issuers, the key lesson is that “Winning the vote” is no longer the end-game. Even unsuccessful activist campaigns have materially influenced board behaviour, disclosure standards, and strategic positioning. Activists are also focusing on their financial returns, which they believe will be enhanced by making changes to the governance structure of funds.

Developments since 2025 suggest a further escalation. Activism is no longer limited to proposing change, but increasingly about controlling outcomes. Large shareholders have demonstrated their ability to block strategic transactions, including mergers. They have also shown the ability to shape board decisions indirectly through ownership concentration. Overall, the events represented a meaningful shift in board dynamics. It is also a reminder that activism can evolve from persuasion to leverage.

Net Asset Value (NAV) Discounts as a Governance Indicator

Perhaps the most enduring theme of 2025 was the treatment of discounts to Net Asset Value (NAV) as a live measure of governance quality. For investment trusts, the market’s message was clear:

• Persistent discounts are no longer seen as a purely cyclical or technical issue;
• They are interpreted as a reflection of board effectiveness, engagement quality, and structural credibility.

Where discounts remain elevated despite buybacks and engagement, investors are increasingly questioning whether the closed-ended structure itself remains appropriate.

The Impact of US-Style Activism on UK Investment Trust Sector

Saba’s role is particularly noteworthy given its identity as a US-based hedge fund exerting influence over UK-listed investment trusts. This has introduced several new dynamics into the market:

1. A different activism playbook: Unlike traditional UK stewardship-led engagement, Saba’s approach has been more overtly transactional and structural, framing persistent discounts as evidence of governance failure rather than market conditions. This has accelerated the pace at which boards are expected to respond.

2. Shareholder concentration risk: Saba’s campaigns highlighted how significant minority stakes can be leveraged to block or influence corporate actions, including mergers. This has sharpened boards’ focus on developing a more granular understanding of their shareholder base and the risks associated with concentrated ownership.

3. Market-wide signalling effect: Even where Saba did not prevail, its campaigns signalled to other investors that boards can be challenged and that the investment trust sector is increasingly open to activist intervention.

Implications for Boards and Issuers

As a result, issuer expectations have shifted: boards are now expected to anticipate activism, not merely respond to it. The experience of 2025 suggests that inaction is now the highest-risk strategy.

The developments across 2025 give rise to several clear governance implications:

1. Engagement must be proactive, not reactive: Waiting for an activist requisition before engaging shareholders is no longer sufficient. Boards are expected to demonstrate a deep understanding of strategy and the systemic risks to the funds.

2. Structural questions cannot be deferred indefinitely: Where discounts persist despite buybacks and engagement, boards should expect pressure to consider more fundamental options, including consolidation or conversion.

3. Corporate actions require activist-proofing: M&A proposals must be stress-tested against shareholder fairness, mandate alignment, and value transfer optics.

4. Shareholder register monitoring is critical: Understanding who holds influence—and how that influence might be exercised—has become a core governance responsibility

5. Structural changes must be considered for contingency: Boards should not wait until pressure escalates to consider alternatives such as mergers, wind-downs, or structural change.

Conclusion: 2025 as an Inflection Point

For UK investment trusts, 2025 was an inflection point. Developments into 2026 suggest it is becoming something more — a structural reset in governance expectations.

The combination of sustained activism, persistent discounts, and increasingly contested corporate actions has fundamentally altered how boards are assessed.

For issuers, the lesson is not that activism must always be resisted or conceded, but that credible governance, clear strategy, and early engagement are now essential defences. In these events, governance is measured by how well the board translates strategy into fruitful shareholder outcomes.

As the sector moves forward, boards that can articulate why the closed-ended model works, and how they will protect shareholder value within it, will be best placed to navigate the next phase of scrutiny.

Introduction

This cross-market comparison has been developed focusing on the United Kingdom and Germany, arguably two of the most sophisticated capital markets in Europe. Distinctions in specific voting guidelines and corporate governance expectations between these jurisdictions are not viewed as compromising the validity of this high-level statistical comparison.

To facilitate a robust dataset for meaningful analysis, the FTSE 100 was utilized for the United Kingdom, while a synthetic « DAX 90“ -comprising an aggregation of the DAX 40 and MDAX 50- was established to provide a comparable German peer group.

Therefore, we examined the voting activity of 15 top-tier global investors across 85 FTSE 100 and 82 DAX 90 constituents throughout 2025, with a total volume of 24,535 and 19,414 recorded investor votes, respectively. It is considered a substantial basis for evaluating voting behaviour against Institutional Shareholder Services (“ISS”) and Glass Lewis (“GL”) recommendations, the two preeminent global proxy advisory firms.

Key Findings

• Within the FTSE 100 and DAX 90 indices, alignment with positive ISS recommendations appears consistently high. In the FTSE 100, twelve investors exhibit an alignment of 99% or greater, whereas ten investors attain this threshold within the DAX 90. The remaining institutional investors nevertheless maintain substantial alignment rates, ranging between 91.7% and 98.7%.
• The negative ISS recommendations reveal a starkly different landscape. The peak alignment in the FTSE 100 reaches 96%, and 88.3% in the DAX 90. Furthermore, alignment rates fluctuate significantly, descending to as low as 19.1% in the FTSE 100 and 14.2% in the DAX 90.
• Regarding positive GL recommendations, the degree of alignment across both the FTSE 100 and the DAX 90 tends to be lower. While ten investors in the FTSE 100 maintain an alignment of 99% or greater, only three investors reach this level within the DAX 90.
• Concluding with negative GL recommendations, the highest alignment within the FTSE 100 stands at 72.2%, with a notable decrease to a floor of 17.7%. In contrast, the DAX 90 exhibits a higher peak alignment of 86.3%, while the minimum alignment observed is 29%.

Deconstructing the « Blind Following » Narrative

The high degree of alignment with positive proxy advisory recommendations suggests that proxy advisory mirrors an established consensus on core corporate governance topics.

In contrast, the lower alignment with negative recommendations indicates that investors’ internal voting guidelines are less rigid and thus frequently support agenda items even when ISS and/or Glass Lewis recommend against them. This highlights a distinct misalignment between the standardized recommendations of proxy advisors and the independent stewardship policies of individual institutional investors.

The (Secret) « Decision-Maker » Narrative

The discourse surrounding proxy advisory firms frequently invokes the narrative of a « secret decision-maker, » a theme that remains a staple of both professional discussions and media coverage.

While it cannot be entirely discounted that certain individual AGMs, if viewed in isolation, might suggest that proxy advice served as the primary catalyst for a voting outcome, our empirical data appears to challenge this assumption.

From Ex-Post Observation to Ex-Ante Strategy

ISS and Glass Lewis recommendations are strong statistical indicators, but their review is essentially passive and retrospective.

While our clients already benefit from a proprietary database granular enough to track & analyse specific agenda item types, achieving success at an AGM requires moving beyond reactive damage control. By shifting the focus to a proactive analysis of individual investor guidelines, companies can bridge the ‘governance gap’ long before a proxy advisory analysis is even published.

Ultimately, a positive outcome is determined by aligning corporate decisions and the meeting agenda with investors’ expectations well in advance of the shareholder meeting.

Statistics: FTSE 100 & DAX 90 vs. ISS & Glass Lewis

Comparison of the Peers: FTSE 100 & DAX 90

The following dataset details the voting activity of the fifteen selected institutional investors alongside their disclosed utilization of ISS and/or Glass Lewis (“GL”) advisory services. This data serves as the empirical foundation for the subsequent analysis of alignment or divergence with the proxy advisory recommendations.

• Sample Size and Investor Profile: The dataset encompasses the aggregate number of agenda items voted upon by each constituent investor across both indices. For instance, Amundi recorded votes on 1,798 items within the FTSE 100 and 1,570 within the DAX 90. It appears that investors utilizing index-tracking strategies naturally exhibit a higher volume of voted agenda items. Conversely, more concentrated or selective investors, characterized by a narrower scope of investee companies, demonstrate a correspondingly lower number of voted items.
• Weighting and Distribution: Within this peer group, the total volume of votes amounts to 43,949. The FTSE 100 accounts for 24,535 of these votes (55.8%), while the DAX 90 represents 19,414 (44.2%).
• Market Variance: The higher volume observed within the FTSE 100 appears to be driven by a greater aggregate number of votable agenda items per company in the UK market, rather than being a result of investor selection. As delineated in the “Methodology & Database” section, the analysis encompasses 85 of the FTSE 100 and 82 of the DAX 90 companies, reflecting a balanced corporate peer group despite the variance in absolute vote counts.

ISS Recommendations Alignment: FTSE 100 & DAX 90

Further illustrations can be found on the heatmaps and bar charts below.

ISS + = Voting +

This dataset shows the percentage of « For » votes cast for agenda items that received a positive ISS recommendation. Any deviation from 100% occurs when an investor votes against an item despite a supportive ISS recommendation.

• High Alignment: Alignment with « For » recommendations remains exceptionally high across both markets; indeed, the degree of alignment exceeds 99% in twelve instances within the FTSE 100 and in ten cases within the DAX 90.
  Market Comparison: The unweighted average alignment for positive recommendations is slightly higher in the DAX 90 (~98.8%) than in the FTSE 100 (~98.1%).
• Regional Trend: In 11 out of 15 cases, investors show higher alignment with ISS « For » recommendations in the DAX 90 compared to the FTSE 100.

ISS – = Voting –

This dataset shows the percentage of “Against » votes cast for agenda items that received a negative ISS recommendation. Any deviation from 100% occurs when an investor votes for an item despite a negative ISS recommendation.

• Low Alignment: Alignment with « Against » recommendations remains low across both markets.
  Market Comparison: In contrast to the consensus observed regarding positive recommendations, the unweighted average alignment for negative recommendations decreases substantially to approximately 41.5% in the FTSE 100 and 51.5% in the DAX 90. Furthermore, individual alignment levels exhibit significant volatility, descending to a floor of 19.1% within the FTSE 100 and 14.2% within the DAX 90.
• Regional Trend: In 10 out of 15 cases, investors demonstrate a relatively stricter adherence to ISS « Against » recommendations in the German market than in the UK.

Glass Lewis (“GL”) Recommendations Alignment: FTSE 100 & DAX 90

Further illustrations can be found on the heatmaps and bar charts below.

GL + = Voting +

This dataset shows the percentage of « For » votes cast for agenda items that received a positive GL recommendation. Any deviation from 100% occurs when an investor votes against an item despite a supportive GL recommendation.
Strong Alignment : Similar to ISS, alignment with positive GL recommendations remains exceptionally high, with nearly all investors exceeding 90% across both markets.

• Market Comparison: The unweighted average alignment for positive recommendations is slightly higher in the FTSE 100 (~98.3%) compared to the DAX 90 (~96.3%).
• Regional Trend: 10 of 15 investors show a higher alignment with GL « For » recommendations in the FTSE 100 compared to the DAX 90.

GL – = Voting –

This dataset shows the percentage of “Against » votes cast for agenda items that received a negative GL recommendation. Any deviation from 100% occurs when an investor votes against an item despite a supportive GL recommendation.

• Low Alignment: Alignment with « Against » recommendations is notably low across both markets.
• Significant Drop in Alignment: Consistent with the ISS data, the unweighted average alignment for negative recommendations is much lower than for positive ones, at approximately 34.1% in the FTSE 100 and 52.2% in the DAX 90. Furthermore, individual alignment levels exhibit significant volatility, descending to a floor of 16.7% within the FTSE 100 and 29% within the DAX 90.
• Regional Trend: 12 of 15 investors demonstrate a stricter adherence to GL « Against » recommendations in the German market than in the UK.

Interpreting Congruence: Why High Alignment Is Not Proof of Causation

According to a paper by Robert Matthews in 2000 titled “Storks Deliver Babies (p=0.008)”, a highly statistically significant correlation exists between stork populations & human birth rates across Europe.

As the paper showed that a high correlation does not inherently imply causality, the author noted: “While storks may not deliver babies, unthinking interpretation of correlation and p-values can certainly deliver unreliable conclusions.”

Possible Factors Influencing Voting Alignments

• Shared Best Practices: Both investors and proxy advisors frequently operate from the same global governance playbooks. Frameworks established by organizations such as the ICGN, UN PRI, and the OECD, alongside national Corporate Governance Codes, create a common baseline. Consequently, high alignments with positive proxy advisory recommendations might just reflect a shared adherence.
• Feedback Loops: ISS and Glass Lewis conduct comprehensive annual policy surveys and regular client consultations to ensure their benchmarks remain aligned. By considering also this direct input for their guidelines, there might be a certain self-reinforcing cycle.
• Routine Consensus: A certain portion of AGM agendas consist of « routine » and rarely controversial items. In these cases, there is a natural market-wide overlap in positive recommendation & voting, which mathematically inflates alignment percentages.
• Common Perspectives: The high degree of alignment with positive recommendations suggests that proxy advisors mirror an established consensus on basic corporate governance best practices.

Possible Factor Influencing Voting Divergences

• Diverging Perspectives: In contrast, the lower alignment with negative recommendations might indicate that investors’ internal voting guidelines are less rigid and thus frequently support agenda items even when ISS and/or Glass Lewis recommend against them. Consequently, this highlights a clear misalignment between the recommendations of proxy advisors and the independent views and voting policies of individual institutional investors.

Methodology Market Peer Comparison & Index Selection

• Our study examines 15 of the largest international institutional investors, selected based on average investment size and strategic shareholder structures.
• The underlying voting behavior has been curated directly from the investors’ respective public disclosure platforms. This approach ensures that the dataset reflects the official, ex-post records of their stewardship activities, providing a transparent and verifiable basis for our analysis.
• Furthermore, the analysis utilizes original ISS and Glass Lewis recommendation data, deliberately avoiding datasets reconstructed ex-post from the disclosed voting records of investors assumed to have outsourced their voting decisions. Our direct access to primary advisory data ensures that the dataset remains both reliable and comprehensive; consequently, this approach facilitates a high degree of analytical precision by eliminating the risks of secondary data degradation.
• We tracked the correlation of ‘For’ and ‘Against’ votes relative to ISS and Glass Lewis guidance, omitting ‘Abstain’ votes from the scope. Abstentions represent a marginal fraction of the total—never exceeding a 0.01% threshold of votes cast—and are frequently non-existent among the investors in our study.To establish peer groups comparable between the UK and Germany, we opted for the FTSE 100 on the one side, and we aggregated the DAX 40 and MDAX 50 to create a synthetic DAX 90.
• By utilizing this synthetic index, we not only achieved a highly balanced sample sizes for our analysis but also concentrated on the German side to large-cap and mid-cap companies, which better reflects the set-up of the FTSE 100.
• To ensure a consistent baseline for voting guidelines and investor expectations, we excluded companies without full proxy coverage—typically, though not exclusively, due to insufficient free float.
• We also excluded companies incorporated outside the target market to ensure a consistent comparison, as foreign entities may be subject to different regulatory expectations and voting guidelines.
• In total, the analysis covers 167 companies: 85 FTSE 100 companies with 24,535 agenda items (55.8% of total votes) and 82 DAX 90 companies with 19,414 agenda items (44.2% of total votes).

Vanguard has published its updated U.S. and global proxy voting guidelines, which take effect in January 2026.

As announced last June, Vanguard has split into two separate investment advisors, Vanguard Capital Management and Vanguard Portfolio Management consisting of distinct investment management and stewardship teams that administer proxy voting for the firm’s internally managed funds¹.  For 2026, they are following identical policies for U.S. companies, though these may eventually diverge in future years.

The U.S. guidelines contain no substantive revisions.  Instead, the language throughout has been amended so that the policy may recommend a particular voting decision rather than stating that the funds will generally vote “for” or “against” a proposal.  Vanguard has also removed detailed factors on certain topics, such as director elections, that would prompt a favorable or negative vote, as discussed below.  This approach is likely the result of SEC guidance issued in early 2025 regarding Schedule 13D/G status.  Vanguard’s policy documents highlight the passive nature of its internally managed U.S. funds, which will not nominate directors, solicit or participate in the solicitation of proxies, or submit shareholder proposals at portfolio companies.

Board composition: Vanguard considers an appropriate mix of skills, experiences and perspectives when examining board composition.  It has removed references to directors’ personal characteristics, such as age, gender and/or race/ethnicity.

Board leadership: Consistent with its prior policy, votes will generally be recommended against shareholder proposals to separate the CEO and chair roles unless there are significant concerns regarding the independence or effectiveness of the board.  Vanguard has deleted from its policy specific factors that would sway it to vote in favor of the shareholder proposal, such as the lack of a robust lead director role, lack of board accessibility, low overall board independence, governance structural flaws, unresponsiveness to shareholder votes, unilateral actions that impair shareholder rights, or oversight failings, including those of a social or environmental nature.

Director capacity and commitments: Vanguard is maintaining its current overboarding policy whereby votes may be recommended against a public company executive who sits on more than two public company boards and other directors who serve on more than four public company boards.  Vanguard has deleted explicit factors that may lead to an exception, such as a public commitment that the director will be stepping down from any directorship(s) necessary to fall within these thresholds.

Director accountability: As in the past, votes may be recommended against directors who fail in their oversight role, fail to act on majority shareholder votes, or take unilateral action that meaningfully diminishes shareholder rights.  Vanguard has eliminated from its policy specific concerns that may spur negative votes, such as “zombie” directors on the board, egregious pay practices, excessive non-audit fees paid to the auditor, unilateral adoption of onerous advance notice or exclusive forum provisions, or failure to oversee material social or environmental risks.

Contested director elections: Vanguard has largely retained the criteria used in its case-by-case evaluation of board contests.  It has removed as a factor whether the board engaged in productive dialogue with the dissident.

Exclusive forum/exclusive jurisdiction: Vanguard will continue to give companies latitude in designating state courts in a company’s state of incorporation or principal place of business as the exclusive forum for adjudicating certain claims.  It has deleted its policy of generally supporting the designation of state courts in Delaware as the exclusive forum. It has also removed its policy of opposing governance committee members if a company unilaterally adopts a forum selection provision that meaningfully limits shareholders’ rights without a compelling rationale.

Hybrid/virtual meetings:  Vanguard has eliminated its specific criteria for supporting proposals to conduct a “virtual-only” shareholder meeting.  It expects such meetings to be designed so as not to curtail shareholder rights, such as shareholders’ ability to ask questions.

BlackRock has released its 2026 updates to the Blackrock Investment Stewardship (BIS) U.S. benchmark policies and engagement priorities which become effective in January 2026¹.

The policy revisions mainly consist of clarifications and changes to wording, particularly in view of the White House executive orders on diversity, equity and inclusion (DEI) and the SEC’s Schedule 13D/G guidance, which were issued in the early part of 2025.  For example, throughout the document, BIS replaced “may vote against” directors with “may not support” directors.  It further noted in its section on shareholder proposals that it is subject to certain rules, regulations, agency guidance and contractual agreements that limit how it interacts with companies.  It explicitly stated that it does not nominate directors for board elections or submit shareholder resolutions to companies.

Other changes include the following:

Board composition:  BIS continues to downplay references to board gender and racial diversity.  Its revised policy states that it may not support members of the nominating/governance committee at an S&P 500 firm where the board is a sustained outlier compared to market practice in terms of having a variety of experiences, perspectives and skillsets.  According to a footnote, this also includes directors’ professional and demographic backgrounds.  BIS has eliminated its previous basis for determining outliers—namely, that 98% of S&P 500 firms had 30% or more diverse representation as of December 2024.

Executive compensation:  BIS added a discussion on executive perquisites, which states that it examines the rationale for certain perquisites, such as security, and whether their appropriateness is regularly evaluated by the compensation committee.

Material sustainability-related risks and opportunities: BIS has clarified that although it considers standardized disclosure of sustainability-related data useful, it does not mandate that companies follow any specific disclosure framework.

Climate and nature-related risk:  BIS has combined its discussion of climate and natural capital risks and indicated that, in both cases, it will convey concerns about board oversight through director election votes or support of a business-relevant shareholder proposal.

BIS has also deleted outdated references, including to the Taskforce on Climate-Related Financial Disclosures (TCFD), which disbanded in 2023, and to earlier research by the BlackRock Investment Institute on the low-carbon transition.  It also removed its expectation that companies stress-test their business models under a range of climate-related scenarios, including the Paris Agreement goal of limiting global warming to well below 2⁰ C.

Companies’ impact on their workforce, supply chains, and communities:  BIS has emphasized that it does not direct a company’s policies or practices on stakeholder relationships, which are the responsibility of the board and management.  It may convey concerns regarding oversight of material risks related to stakeholders through its votes on director elections or support of a business-relevant shareholder proposal.

Human capital management:  BIS has removed its expectation that companies disclose their approach to DEI, as well as their workforce demographics based on EEO-1 Survey disclosures.

Corporate political activities:  BIS adjusted its criteria for supporting a political spending or lobbying disclosure proposal to situations where additional transparency would aid in understanding how the company manages material risks associated with its political activities.  Previously, BIS felt more disclosure was warranted if it was unclear how a company’s political activities supported its strategic policy priorities or if there appeared to be discrepancies.  BIS also deleted references to using third-party research, such as the CPA-Zicklin Index of Corporate Political Disclosure and Accountability, for industry peer comparisons.

Shareholder proposals:  BIS has emphasized its case-by-case approach to shareholder proposals, stating that it may support (rather than is likely to support) disclosure requests that aid in understanding how companies manage material risks that affect their long-term performance.  It will continue to reject shareholder proposals that are inconsistent with long-term financial value or that seek to micromanage companies.

BIS will no longer routinely explain to companies its rationale for supporting shareholder resolutions.  However, its updated policy describes some of the factors it considers when evaluating them:

• Consistency between the specific request made in the proposal, the supporting documentation and the proponent’s other communications on the issue.
• The costs and benefits to the company in complying with the request.
• The company’s governance practices and disclosures relative to those of peers.
• The legal effect of the proposal, such as whether it is precatory or binding or if it would be deemed illegal in a given jurisdiction.

BIS has removed its discussion on escalation efforts, including supporting a shareholder proposal or voting against directors, if a company has not shown sufficient urgency in addressing a material risk.

¹ See BlackRock’s 2026 U.S. benchmark proxy voting guidelines and engagement priorities at https://www.blackrock.com/corporate/literature/publication/blackrock-investment-stewardship-benchmark-guidelines-us.pdf and https://www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf.

Glass Lewis has published its 2026 U.S. benchmark policy updates, which will take effect for shareholder meetings on or after Jan. 1, 2026.¹  The substantive changes pertain to mandatory arbitration provisions and Glass Lewis’s pay-for-performance (PFP) methodology, which is addressed in more detail in a separate document.²  Other sections of the guidelines have been clarified, including supermajority voting provisions, certificate and bylaw amendments that reduce shareholder rights, and company omissions of shareholder proposals.

Glass Lewis has also updated the language in the document to clarify that the guidelines contain the views of its benchmark policy, which reflects broad investor opinion and widely accepted governance principles.  Beginning in 2027, it will transition from a single house view to a suite of research perspectives to inform clients’ proxy voting decisions.³

Mandatory Arbitration Provisions

Glass Lewis has amended its benchmark policy to include its approach to mandatory arbitration provisions, which restrict shareholders’ legal recourse and limit the transparency and legal certainty that public court rulings provide.   In September 2025, the SEC issued a policy statement that facilitated companies’ ability to include these provisions in their governing documents, if consistent with state law, when contemplating an initial public offering (IPO).⁴

If a company’s governing documents include a mandatory arbitration provision or other potentially negative provision following completion of its IPO, spin-off or direct listing, Glass Lewis may recommend against the governance committee chair or the entire committee.  Glass Lewis will also oppose any bylaw or charter amendment seeking to adopt a mandatory arbitration provision without a compelling rationale, among other factors. 

PFP Evaluation

Glass Lewis has made significant changes to its proprietary PFP model, including replacing its historical A-F letter grade system with a scorecard-based approach to evaluating PFP alignment relative to Glass Lewis-selected peers over a five-year measurement period.  Final alignment scores, which range from 0 to 100, are determined by the weighted sum of up to six tests, each with their own concern rating (ranging from severe to negligible).  The tests include:

• CEO granted pay vs. total shareholder return (TSR)
• CEO granted pay vs. financial performance (revenue growth, return on equity, return on assets and sector-specific metrics)
• CEO short-term incentive (STI) payouts (as a percentage of target) vs. TSR
• Total named executive officer (NED) granted pay vs. financial performance
• CEO compensation actually paid vs. TSR
• Qualitative features (downward modifier)

This analysis informs Glass Lewis’s voting decisions on say-on-pay proposals.  Companies with an overall rating of “severe” or “high” concern are more likely to receive a negative recommendation.

 Shareholder Rights

Currently, Glass Lewis recommends against the chair of the governance committee, or the entire committee, if the board unilaterally amends the governing documents to reduce or remove important shareholder rights, or to otherwise impede the ability of shareholders to exercise such rights.  Glass Lewis has added the following to its list of board actions that would prompt a negative recommendation:

• The adoption of provisions that limit shareholders’ ability to submit proxy proposals.
• The adoption of provisions that limit shareholders’ ability to file derivative suits.
• The adoption of a plurality, rather than a majority, voting standard in director elections.

The updates reflect recent revisions to the Texas Business Organizations Code (TBOC) which allow publicly listed companies domiciled in the state to impose higher ownership thresholds for shareholders to submit proposals than required under SEC Rule 14a-8.  In addition, certain states, such as Texas and Nevada, have adopted laws permitting companies to impose ownership thresholds for shareholders to initiate derivative actions.

 Amendments to the Certificate of Incorporation and/or Bylaws

Glass Lewis has consolidated its approach to amendments to the certificate and/or bylaws into a single section of the policy document.  In its case-by-case evaluation, Glass Lewis will generally support amendments proposed by management that are unlikely to have a material negative impact on shareholders’ interests, such as technical amendments.  It will continue to discourage the practice of bundling amendments into a single proposal, which could lead to an adverse recommendation if any of the amendments are of significant concern.

Supermajority Voting

Glass Lewis is codifying a case-by-case approach to management proposals to repeal supermajority voting provisions to take into account situations where the company has a large or controlling shareholder and a supermajority requirement may protect the interests of minority shareholders.   In such cases, Glass Lewis will oppose the resolution.  Its current policy favors a simple majority vote to approve all matters presented to shareholders.

Excluded Shareholder Proposals

Glass Lewis adheres to the view that shareholders should be afforded the opportunity to vote on all matters of material importance.   Currently, it makes note of instances where a company has successfully petitioned the SEC to exclude a shareholder proposal through the no-action process.  If it believes that the exclusion is detrimental to shareholders, it may recommend against the governance committee members.

Glass Lewis has removed this guideline in view of the SEC’s mid-November announcement that, due to resource constraints following the recent government shutdown, it will not be responding to most no-action requests through Sep. 30, 2026.  Glass Lewis will monitor the SEC’s ongoing changes to the shareholder proposal process and may update its policy on omissions prior to or during the 2026 proxy season.

Institutional Shareholder Services (ISS) has published its U.S. benchmark policy updates for the upcoming proxy season, which will take effect for shareholder meetings on or after Feb. 1, 2026¹. As detailed below, the revisions mirror the changes ISS proposed in October and are concentrated around the following topics: multi-class capital structures, executive and non-employee (NED) compensation, and environmental and social (E&S) shareholder proposals. Notably, ISS is adopting a more flexible approach to certain issues, including giving companies more latitude in their choice of equity pay awards and their responsiveness to say-on-pay (SOP) votes, as well as moving away from its default position of supporting specific categories of E&S resolutions.

ISS has additionally made minor edits to the policy document, including eliminating information that is duplicated in its U.S. Peer Group, U.S. Executive Compensation Policies and U.S. Equity Plans FAQs, which will be updated in mid-December.

Problematic Capital Structure/Unequal Voting Rights

ISS is eliminating inconsistencies in its treatment of capital structures with unequal voting rights by considering them problematic regardless of whether superior voting shares are classified as “common” or “preferred.”  Preferred shares that only have voting rights with respect to items that affect their class of holders are not considered problematic.

ISS will oppose management proposals to create a new class of preferred stock with voting rights superior to the common stock with the following exceptions:

• Convertible preferred shares that vote on an “as converted” basis; or
• The enhanced voting rights of the preferred shares are limited in duration and applicability and are voted in a way that mirrors the votes of the common shares.

The same exceptions will apply to ISS’s policy of recommending against directors, committee members or the full board (other than new nominees) at companies that maintain multi-class capital structures with unequal voting rights.

 Long-Term Alignment in Pay-for-Performance (PFP) Evaluation

ISS is extending the time horizon of its U.S. PFP quantitative screens (Relative Degree of Alignment and Financial Performance Assessment) from three years to five years to better reflect how investors assess a company’s long-term performance when evaluating CEO compensation relative to peers.

ISS’s assessment of pay quantum (Multiple of Median test) will now incorporate both one-year and three-year views of CEO pay relative to peers to smooth out short- to mid-term fluctuations, unusual one-time events, or external factors.

 Time-Based Equity Awards with Long-Term Time Horizon

ISS is taking a more flexible approach in evaluating the equity pay mix in its PFP qualitative analyses whereby time-based equity awards with extended time horizons will be viewed positively.

Although ISS did not provide further details, a plurality of investor respondents to its 2025 policy survey considered time-based awards with three-year vesting plus a two-year post-vesting retention requirement to be sufficiently long-term to dispense with performance requirements for part or all of executives’ long-term incentive awards.

Company Responsiveness to SOP Votes

ISS will be more flexible towards company responsiveness to a low (less than 70%) SOP vote in the prior year in cases where shareholder feedback is difficult to obtain because of recent SEC guidance regarding Schedule 13G (passive) versus Schedule 13D (active) filing status for institutional investors.  If a company discloses that it attempted but failed to elicit sufficient feedback from its investors, ISS will assess the company’s actions taken in response to the vote and how they are beneficial to shareholders when recommending on the reelection of compensation committee members.

ISS has also clarified the factors it considers in the case of low SOP support related to an unusual situation, such as a proxy contest, merger or bankruptcy.  In addition to the disclosure of engagement efforts and relevant compensation actions, ISS will take into account significant board turnover.

High NED Pay

ISS is expanding its policy on high NED compensation, allowing for adverse recommendations against the responsible board committee in the first year of occurrence of highly problematic pay or when a pattern emerges across non-consecutive years.  Currently, negative recommendations are only triggered after two or more consecutive years of excessive NED pay absent a compelling rationale or other mitigating factors.

Problematic NED pay practices include large pay magnitude; performance awards, retirement benefits and excessive perquisites; and inadequate disclosure of the rationale for unusual payments.  NED pay practices that are only marginally problematic in the absence of other escalatory factors or multi-year patterns will continue to receive warnings only.

Equity Plan Scorecard (EPSC) Enhancements

ISS is adding a new scoring factor under the Plan Features pillar of its EPSC that will assess whether equity plans that include NED participation disclose cash-denominated award limits, which is considered best practice.  For 2026, the NED individual award limit factor will only apply to S&P 500 and Russell 3000 ESPC models.

ISS is also introducing a new overriding negative factor where an equity plan proposal will receive a negative recommendation if it lacks sufficient positive features under the Plan Features pillar, despite an overall passing score.  For 2026, this will apply to S&P 500, Russell 3000, and non-Russell 3000 EPSC models.

E&S Shareholder Proposals

ISS is implementing a fully case-by-case approach to shareholder proposals on diversity, political contributions, human rights and climate change/greenhouse gas emissions to reflect shifting investor sentiment, declining support for such proposals, regulatory changes and evolving company practices.  Currently, ISS generally recommends in favor of such proposals, though its level of support has been falling in recent years.²

Globally, ISS will continue to apply a consistent case-by-case framework to its evaluation of E&S proposals.  It is adding a new factor on whether the proposal addresses substantive matters that impact shareholders’ interests, including shareholder rights.