The 2026 proxy season, while appearing calm on the surface with high director support and minimal failed "say-on-pay" votes, is masking a significantly more complex and unpredictable governance environment. According to insights from EY’s Center for Board Matters, led by Lee Henderson and Jamie Smith, companies and investors alike are contending with a landscape increasingly shaped by rapid regulatory shifts, evolving legal frameworks, and the pervasive influence of technological advancements, particularly artificial intelligence (AI). This evolving dynamic presents a formidable challenge for boards in accurately assessing investor sentiment and preparing for potential surprise outcomes and activist challenges.
In Brief: A Surface Calm Hiding Deeper Currents
Headline voting results from the 2026 proxy season paint a picture of relative stability. Director support remained robust, with an average of 96% for S&P 500 companies. Similarly, "say-on-pay" votes saw continued high affirmation, averaging 90% support. The number of shareholder proposals reaching the ballot also saw a sharp decline. However, these headline figures obscure a more intricate reality. Companies and investors are navigating an increasingly uncertain and fragmented proxy landscape. The implications are significant: it is becoming more difficult for boards to truly understand the evolving views and priorities of their most significant investors, potentially leaving them less prepared to address unexpected voting results and the persistent threat of activist investor campaigns.
This analysis, drawing from an EY memorandum based on ESGAUGE data, highlights seven critical questions that board members should consider to effectively assess the 2026 proxy season and prepare for the challenges ahead.
1. Adapting Board Structures for Technological Oversight
The increasing prominence of technology within corporate strategy and risk management is prompting a re-evaluation of board oversight structures. The data reveals a growing trend towards dedicated technology committees. Currently, 17% of S&P 500 boards have established such committees, a notable increase from 15% in 2022 and 10% in 2018. However, the EY analysis emphasizes that a standalone technology committee is not a universal solution. Many organizations are opting to expand the purview of existing committees, most commonly the audit committee, to encompass technology-related matters such as artificial intelligence (AI) and cybersecurity.
The choice of committee structure and its responsibilities is a decision that nominating and governance committees must weigh carefully, considering various factors unique to their organization. Regardless of the chosen model, a fundamental imperative remains: as AI continues to transform business operations, effective oversight of its impact on strategy and risk, and the clear communication of this oversight to stakeholders, is paramount. This necessitates a proactive approach to ensure boards are equipped to understand and guide the integration of new technologies.
2. Cultivating and Communicating Board AI Acumen
A recurring theme emerging from investor discussions highlights a desire for greater transparency regarding how boards are exercising oversight of AI and technology more broadly. Investors are keen to understand the mechanisms by which boards are acquiring the necessary skills and experience to effectively govern AI strategy and manage associated risks. In response, an increasing number of companies are actively showcasing the relevant technological expertise of their board members. This proxy season, 37% of S&P 500 companies disclosed AI experience for at least one director, a significant leap from just 11% in 2022. Overall, the percentage of S&P 500 directors whose AI experience is cited in proxy statements has risen from a mere 1% in 2022 to 5% in 2026.
However, the EY report cautions that effective oversight extends beyond mere technical credentials, especially given the rapid pace of technological evolution. Boards must consider how their disclosures reflect ongoing education, training initiatives, and the integration of independent external perspectives. These efforts are crucial for building comprehensive board-level AI acumen and ensuring boards remain agile in the face of new developments. This suggests a need for continuous learning and a commitment to staying abreast of the latest technological trends and their implications for the business.
3. Evolving Approaches to Shareholder Proposals
The landscape of shareholder proposals has undergone a significant transformation following the Securities and Exchange Commission’s (SEC) decision in November 2025 to step back from its role in responding to no-action requests. This shift has introduced greater uncertainty for companies, complicating decisions on how to respond to proposals. Boards must now carefully weigh the reputational and litigation risks associated with excluding proposals without clear SEC backing.
Despite these complexities, the number of proposals that ultimately went to a vote at S&P 500 companies saw a decrease, with approximately 300 proposals this year. This represents an 18% year-over-year decline and a substantial 43% reduction compared to 2024 levels, continuing a trend of fewer proposals and lower support in the current business and policy climate.
As the policy environment surrounding shareholder proposals continues to evolve, EY advises boards to focus on areas where investor support remains significant. Governance proposals, for instance, continued to garner strong backing, averaging 33% support, with some achieving majority approval. These included proposals advocating for the elimination of supermajority voting requirements, enabling shareholders to call special meetings or act by written consent, and declassifying the board. While environmental and social proposals averaged a lower 15% support, a notable trend emerged: the proportion of these proposals receiving over 30% support increased year-over-year. A case in point is a proposal on greenhouse gas emissions disclosure, which approached majority support with 47%.
Beyond vote percentages, the underlying investor sentiment remains strong. A substantial 89% of investors indicated that their stewardship efforts concerning environmental and social issues would remain consistent in 2026. When asked to identify their top three priorities for companies, the management of material non-financial risks, such as input scarcities and extreme weather events, emerged as the second most cited topic, with 53% of investors highlighting its importance. This underscores the imperative for boards and management to demonstrate robust oversight and management of these material risks, including those with environmental and social dimensions.
4. Identifying Director Vulnerabilities in a Fragmented Engagement Landscape
While overall director support remained high at an average of 96%, with only a few directors failing to secure majority backing, scrutiny on certain director roles persisted. Nominating and governance committee chairs, for example, averaged 92% support, a slightly lower figure compared to the 97% average for audit, risk, and technology committee chairs. Furthermore, longer-tenured directors tended to face marginally higher opposition, with those serving over 10 years averaging 95% support.
Director vote outcomes are influenced by a confluence of factors, ranging from company performance and capital allocation strategies to fundamental governance practices and board composition. Boards are urged to proactively monitor how management is tracking changes in investor director voting policies and practices. If support levels for any directors appear to be declining, board members should delve into how management is uncovering the underlying drivers of these voting decisions. This process can be particularly challenging in the current, more restricted engagement landscape, where direct investor dialogue may be less frequent.
5. Realigning Investor Engagement Strategies with Current Realities
The investor engagement landscape has become notably more nuanced and fragmented. Following the SEC staff’s 2025 guidance on Regulation 13D-G, which stipulates that certain investor engagement activities may trigger additional reporting requirements, some investors have adopted a more cautious approach. This has led to a reduction in proactive outreach, placing a greater onus on companies to initiate and shape engagement agendas.
Concurrently, several large asset managers have transitioned away from centralized stewardship teams toward more segmented engagement models. This shift, coupled with the expansion of voting choice programs, has resulted in a more fragmented and less predictable voting ecosystem. Against this backdrop, EY recommends that boards encourage management to take a proactive stance in leading engagement with an increasingly diverse array of stakeholders. This includes fostering the courage within management to broach challenging topics and to pose questions that elicit meaningful investor feedback. As investor signals become more nuanced in advance of voting outcomes, the quality and strategic intent behind these questions become critically important for gaining actionable insights.
6. Unpacking Investor Views on Executive Compensation Beyond Vote Results
Say-on-pay support currently stands at a five-year high, with S&P 500 companies averaging 90% approval for these votes. Only a handful of proposals, specifically five, failed to achieve majority support, and the percentage of companies receiving less than 90% support has decreased to 26%, down from 32% in the previous year. However, akin to the dynamics surrounding shareholder proposals, voting outcomes alone may not fully capture the complete picture of investor sentiment regarding executive compensation. A negative vote, by itself, does not reveal the specific reasons behind the decision, just as a positive vote does not necessarily expose emerging concerns that could influence future voting behavior.
Compensation committees are encouraged to prompt management to proactively include executive pay as a standing agenda item in engagement discussions. Furthermore, making the compensation committee chair available for investor meetings, when appropriate, can foster greater dialogue and understanding. As one investor aptly noted, failing to do so and relying solely on investors to raise concerns could lead to unwelcome surprises during the next say-on-pay vote. This proactive approach can help mitigate risks and build stronger relationships with shareholders.
7. Ensuring Disclosures Are Optimized for AI-Enabled Stewardship
A significant and growing trend is the increasing use of AI tools by investors to review corporate disclosures, benchmark companies against their peers, and inform voting decisions, although not yet to make those decisions autonomously. This evolving landscape necessitates that companies adapt their disclosures to be comprehensible to both human readers and machine-based analysis. Furthermore, companies must prepare for a new level of depth and rigor in the questions posed by investors during engagements.
Critical information should not be obscured within formats that AI tools currently struggle to interpret. Companies must recognize that investors can now analyze filings with an unprecedented level of scrutiny and at a scale that was previously impossible. As one investor commented, "there is no hiding in the footnotes anymore," underscoring the need for clarity and directness in all disclosures.
AI is also empowering investors to efficiently extract and evaluate vast quantities of unstructured data, from skills highlighted in job postings to employee reviews. This allows for a comparative analysis of the external perception of a company against its official disclosures. Consequently, it is more crucial than ever for companies to understand the narrative that AI may construct based on this data and to ensure it aligns seamlessly with the intended corporate narrative. This requires a strategic approach to data management and communication.
Moving Forward: Proactive Governance in a Dynamic Era
While the headline vote outcomes of the 2026 proxy season may appear tranquil, the underlying forces reshaping the corporate governance landscape – including regulatory shifts, the pervasive influence of AI, and a more fragmented investor stewardship ecosystem – continue to gain momentum. Boards that proactively look beyond the topline results of this year’s votes, engaging in deeper analysis and strategic adaptation, will be far better positioned to navigate the complexities and challenges that lie ahead. The ability to anticipate, understand, and respond effectively to evolving investor expectations and technological advancements will be a defining characteristic of successful governance in the coming years.
