2025 Proxy Season Review: Compensation-Related Matters
Summary
The 2025 U.S. annual meeting proxy season (meetings through 30 June 2025) showed continued strong shareholder support for executive pay and equity plan proposals, with average say-on-pay support at c.90% (S&P 500) and 91% (Russell 3000). Failed say-on-pay votes remained rare (5 S&P 500; 27 Russell 3000) and 99% of proposals passed. ISS recommendations continued to sway vote outcomes: negative ISS recommendations cut support materially (c.26% lower at S&P 500 companies; c.22% lower at Russell 3000). ISS’s quantitative pay-for-performance measures (notably Relative Degree of Alignment, RDA) remain central, but qualitative concerns — especially limited or opaque performance goals, above-target payouts and one-off awards — were the most frequently cited reasons for negative recommendations. The SEC hosted a June 2025 roundtable on executive compensation disclosure, with agreement that rules need improvement but little consensus on the fixes. Equity plan votes were broadly successful (average support c.90% S&P 500; 88% Russell 3000), though ISS recommended against a larger share of plans than in 2024 for some cohorts.
Key Points
- Say-on-pay average support: ~90% (S&P 500) and ~91% (Russell 3000) in H1 2025; 99% of proposals passed.
- Failed say-on-pay votes: 5 S&P 500 companies and 27 Russell 3000 companies (slight uptick vs H1 2024).
- ISS negative recommendations reduced shareholder support by ~26% (S&P 500) and ~22% (Russell 3000) on average.
- RDA (alignment of CEO pay and TSR) remains the single strongest quantitative predictor of negative ISS recommendations.
- Top qualitative concerns: limited/opaque performance goals, above-target payouts, and large one-off awards; security perquisites and sizeable non-performance pay also rose as issues.
- SEC roundtable (June 2025): consensus that disclosure rules need updating but disagreement between companies and investors on whether to simplify or expand disclosures.
- Equity plan votes: average support ~90% (S&P 500) and 88% (Russell 3000); ISS recommended against a higher share of Russell 3000 plans (c.32%) than S&P 500 plans (c.23%).
Content Summary
The memorandum reviews compensation-related voting at U.S. annual meetings through 30 June 2025. Overall results remained robust with high approval rates for both say-on-pay and equity plan proposals. There was notable year-over-year turnover among companies that failed prior say-on-pay votes: most remediated issues and regained majority support in 2025. ISS’s multi-factor approach (quantitative screens: RDA, MOM, PTA, plus FPA; followed by qualitative review) continued to shape investor outcomes. Although RDA stayed the dominant quantitative driver, a larger share of companies received negative recommendations despite low quantitative concern, signalling that ISS’s qualitative analysis (goal rigour, disclosure transparency, one-off awards, perquisites) had increasing influence. Security-related perquisites and corporate aircraft use were cited more often. The SEC roundtable highlighted competing views on disclosure reform — issuers seeking simplification; investors wanting more transparency — and the SEC is soliciting public comment ahead of likely rule proposals. Equity plan approvals remained high despite more frequent ISS negative recommendations in some segments; ISS scorecard issues included plan cost, features and grant practices.
Context and Relevance
This review is essential reading for boards, remuneration committees, corporate secretaries, investor relations teams and compensation consultants. It summarises what drove shareholder votes in 2025 and where proxy advisers — particularly ISS — focused their scrutiny: aligning CEO pay with shareholder returns and ensuring rigorous, transparent performance metrics. The findings matter for drafting incentive goals, structuring one-off awards and explaining security-related benefits. With the SEC signalling potential disclosure rule changes, companies should anticipate heightened scrutiny and consider pre-emptive disclosure and engagement strategies.
Why should I read this?
Quick version: if you care about whether your company’s pay policies will sail through the proxy season or trigger a proxy fight, read this. It tells you what tripped other companies up — opaque targets, easy above-target payouts, big one-off awards and growing scrutiny of security perks — and where ISS and investors will probably keep pounding in 2026. We skimmed the tables and flagged the headline risks so you don’t have to.