Economic and Geopolitical Headwinds to Shape 2026 Annual Meeting Seasons, ISS Governance Forecasts

ROCKVILLE, Md. (February 12, 2026) — ISS Governance, a leading global provider of independent and objective shareholder meeting research and vote recommendations and a unit of ISS STOXX, today announced the release of its annual global outlook report, Top Governance & Stewardship Trends for 2026, an in-depth analysis examining trends and many key issues institutional investors and companies are likely to face in 2026.

This year’s main annual meeting, or “proxy,” seasons will take place amid heightened geopolitical challenges, persistent trade, labor and industrial policy tensions, and accelerating regulatory focus—including those concerning AI, data security, climate disclosures, national security, and shareholder rights.

“Institutional investors and their portfolio companies will have to navigate economic and political uncertainties, and the direct implications on governance and stewardship priorities including on corporate risk oversight, supply chain resilience, M&A strategy, executive compensation alignment, climate and sustainability recalibrations, human capital management, and effective board oversight, accountability, and decision making,” predicts Gabriel Alsina, Global Head of Research for ISS Governance.

Key takeaways from the report include:

M&A and Activism

• 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 27 proxy contests for board seats in the U.S. in 2025, a decrease from 32 in 2024. 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.

Compensation and Say-on-Pay

• 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, make-whole 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.
• 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.
• 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 culture 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.

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.
• 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 companies providing explanations in lieu of compliance with 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.

Environmental & Social (E&S) topics

• 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 counter-ESG proposals with limited support, and the politicization of ESG.
• In 2025, the SEC’s issuance of Staff Legal Bulletin 14M resulted in a sharp increase in E&S shareholder proposal omissions in the U.S. The guidance made it easier for companies to justify the 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 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.
• 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.

Regulatory, Competitiveness and Other Developments

• In a new Compliance & Disclosure Interpretation 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.
• For 2026, the SEC decided not to make no-action determinations. This is expected to lead to a further decline in the proposal count. Chairman Atkins endorsed a new theory that Delaware law provides no basis for non-binding proposals and invited companies to seek a DE court ruling.
• 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, 2026 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.
• 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.

To download a copy of the full report, please click here.  

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About ISS Governance
Founded in 1985 as Institutional Shareholder Services (ISS) Inc., ISS Governance is a leading global provider of independent and objective shareholder meeting research and recommendations, providing multiple voting policy choices as well as end-to-end workflow solutions for institutional investors. More than 1,600 clients worldwide utilize ISS Governance’s actionable expertise to help them make informed investment stewardship decisions, and to help them manage their voting responsibilities. Covering over 50,000 meetings annually, ISS Governance leverages its extensive global footprint, deep experience, high quality data and analysis, unified client support, and technology infrastructure to continuously evolve and extend its innovative suite of solutions to meet clients’ evolving portfolio, fiduciary, and stewardship requirements. Learn more at: https://www.issgovernance.com/solutions/proxy-voting-services/ 

About ISS STOXX
ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of approximately 4,000 professionals operating across 31 locations in 20 countries. Its approximately 5,500 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on sustainability, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.  

Media Contact:
Izabella Nagy
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press@iss-stoxx.com