The 2026 say-on-pay season concluded with a notable uptick in shareholder support for most S&P 500 companies, signaling a generally positive reception of executive compensation packages. Approximately 75% of these companies achieved at least 90% shareholder approval, an increase from the 70% recorded in the previous year. Concurrently, the proportion of companies falling below the 70% support threshold saw a slight decline, moving from about 6% to 5%. This suggests a market trend towards greater shareholder confidence in the alignment of executive pay with company performance and governance practices.
However, a deeper analysis of the data reveals a concentration of weakness within the lower-support group. While the overall number of companies with critically low support diminished, the remaining cases highlighted specific and persistent governance issues. A significant finding was that large, special executive awards were present in half of the 22 companies that received less than 70% shareholder support. Moreover, all five of the votes that outright failed were linked to outsized equity grants, underscoring a direct correlation between substantial one-time awards and negative shareholder sentiment.
This trend also extended to companies that received adverse recommendations from influential proxy advisory firms like Institutional Shareholder Services (ISS). Among widely held companies with such a recommendation, shareholder support barely reached the mid-70s, averaging a concerning 56.9%. This figure is notably lower than any pre-pandemic year within the reviewed period, indicating a potential erosion of trust or a heightened level of scrutiny on compensation practices in these specific instances. The data strongly suggests that the presence of substantial one-time awards was a primary driver of this weakened support, with every failed vote in the special-award sample directly involving an outsized equity grant.
Broad Trends in Say-on-Pay Results for 2026
The aggregate data for the 2026 say-on-pay season paints a picture of overall market improvement. The percentage of S&P 500 companies securing at least 90% shareholder support rose to 74.8%, a significant jump from 70.0% in 2025. This indicates a broader acceptance of executive pay structures across the market. Lower support ranges remained relatively stable, with five companies failing to achieve a majority vote in both 2025 and 2026. The share of companies receiving less than 70% support also saw a modest decrease, from 5.9% to 5.0%.
However, the severity of these low-support outcomes warrants attention. A result below 70% typically signals significant shareholder dissatisfaction, prompting direct engagement and a demand for clear explanations and corrective actions in subsequent proxy filings. Investors expect companies to address concerns proactively and transparently, especially when compensation packages are perceived as misaligned with performance or governance standards.
Identifying the Roots of Shareholder Discontent: The Impact of Special Awards
The FW Cook memorandum, authored by Chloe Maister and Kenneth H. Sparling, meticulously dissected the factors contributing to shareholder dissent. The analysis revealed that within the group of 22 S&P 500 companies that garnered less than 70% support, a striking 21 also received an adverse ISS recommendation. This highlights the significant influence of proxy advisor feedback on shareholder voting decisions.
The primary concerns cited by ISS and shareholders in these low-support cases were frequently intertwined. Large special awards, often termed "mega grants" or "golden handshakes," were identified as a key issue in half of these 22 underperforming companies. These awards, typically granted outside of regular annual or long-term incentive plans, often involve substantial equity grants intended to retain or reward key executives. While sometimes justified by unique circumstances or exceptional performance, their size and structure can easily trigger shareholder concerns about proportionality and fairness.
Closely following large special awards, poor pay-for-performance alignment was cited in an equal number of cases (11 companies). This suggests a critical disconnect where executives are receiving significant compensation irrespective of the company’s financial or operational achievements. Incentive design flaws, including excessive discretion granted to the compensation committee, weak or ambiguously defined performance goals, or a lack of rigorous goal-setting, were also contributing factors, noted in eight companies. It is important to note that these issues often overlapped, creating a compounding effect that amplified shareholder objections.
The Influence of Ownership Structure on Say-on-Pay Outcomes
The analysis also shed light on the impact of ownership structure. Companies with controlled or concentrated ownership, where a significant portion of voting power rests with a few key shareholders (such as founders or private equity firms), tended to receive higher average support. These companies represented one-third of the total group receiving adverse ISS recommendations, with an average support of approximately 81%. This higher support level, while seemingly positive, can sometimes mask underlying governance concerns that might be more apparent in widely held companies.
When these controlled-ownership companies were excluded from the analysis, the picture for widely held companies became clearer and more concerning. The average support among the 24 widely held companies that received adverse ISS recommendations dropped to a stark 56.9%. This figure represents the lowest level of support seen in any pre-pandemic season over the past decade, underscoring a significant shift in shareholder sentiment and expectations.
The data further emphasized the pivotal role of large one-time awards in these underperforming widely held companies. The study found that every single failed vote within the special-award sample was directly attributable to an outsized equity award. This indicates that, for companies without concentrated ownership, the magnitude and perceived fairness of these large grants are under intense scrutiny and can be a decisive factor in shareholder approval.
Examining the Impact of Special Award Value
To provide a more granular understanding of the relationship between special award size and shareholder support, FW Cook conducted a targeted review of S&P 500 companies that granted non-new-hire special awards valued at $15 million or more. Awards to new hires were excluded due to distinct governance considerations, such as the replacement of forfeited compensation from previous employers.
The findings revealed a considerable variation in support levels for awards below $50 million. Among widely held companies in this lower award value bracket, those that received at least 80% shareholder support typically had awards in the vicinity of $30 million or less and also benefited from favorable ISS recommendations. However, smaller award sizes did not automatically translate into strong shareholder support. For instance, two companies with awards around $29 million and $40 million respectively experienced support levels only in the high-50s. The company with the smaller award had granted an entirely time-based grant as an executive transitioned to a reduced role, while the larger award was characterized as a promotional performance award with undisclosed goals, layered on top of existing annual grants, both of which likely contributed to the shareholder skepticism.
The pattern became more pronounced at higher award values. For widely held companies granting special awards of $50 million or more, shareholder support peaked at approximately 70%. Critically, all four failed votes identified within the special-award sample involved awards of at least this significant size. Two of these failed votes were for awards that were entirely performance-based, valued at approximately $50 million and $60 million, respectively. This suggests that even with performance conditions in place, the sheer magnitude of the award, coupled with concerns about goal rigor, the stated rationale for the award, the company’s past practices with special grants, and its overall performance history, continued to influence shareholder outcomes. Ultimately, performance conditions alone were insufficient to guarantee positive shareholder support for these substantial grants.
Key Implications and Preparations for the Future
The 2026 say-on-pay season’s results offer critical insights for compensation committees and management teams. The data clearly indicates that while overall shareholder support for executive compensation remains robust, a significant segment of the market, particularly widely held companies, is highly sensitive to the structure and size of special awards. An adverse ISS recommendation, while not an absolute veto, can act as a significant impediment, capping support levels in the mid-70s for companies facing such scrutiny.
The concentration of negative votes around large special awards highlights the need for meticulous planning and robust communication. Companies considering substantial one-time grants must be prepared to demonstrate:
- Clear and Rigorous Performance Goals: Goals should be specific, measurable, achievable, relevant, and time-bound (SMART), and crucially, they must be communicated clearly to shareholders. Undisclosed or vaguely defined goals are a red flag for proxy advisors and investors.
- Proportionality and Market Benchmarking: The size of the award should be justifiable in relation to the executive’s role, the company’s performance, and comparable market practices. Large awards should be benchmarked against similar grants at peer companies, considering both value and structure.
- Alignment with Company Performance and Strategy: Special awards should directly support critical business objectives and be clearly linked to measurable improvements in company performance, whether financial, operational, or strategic.
- Consideration of Prior Grant History and Governance: The company’s history of granting special awards and its overall governance record will be scrutinized. A pattern of frequent or exceptionally large grants without clear justification can undermine shareholder confidence.
- Transparency and Disclosure: Comprehensive disclosure in proxy statements is paramount. This includes detailing the rationale for the award, the specific performance metrics and goals, vesting schedules, and the impact on the executive’s overall compensation.
The divergence in support between widely held companies and those with concentrated ownership also suggests that companies should be aware of their specific shareholder base and tailor their engagement strategies accordingly. While the $50 million threshold noted in the study is an observation based on the 2026 data, it serves as a powerful indicator that higher award values attract greater scrutiny.
Looking ahead, compensation committees should anticipate continued investor focus on the interplay between award size, performance alignment, and governance transparency. Proactive engagement with major shareholders and proxy advisory firms throughout the year, rather than solely relying on the proxy statement, can help address potential concerns before the annual meeting. The insights gleaned from this season’s results underscore the importance of a forward-looking approach to executive compensation, ensuring that awards are not only competitive but also demonstrably aligned with shareholder interests and sound governance principles. The upcoming articles in this series will further explore strategies for navigating these complex compensation challenges and preparing for off-season engagement.
