ISS Announces Benchmark Policy Update for 2026

On November 25, 2025, Institutional Shareholder Services (ISS) released its U.S. Benchmark Policy Voting Guidelines for the 2026 annual meeting season. Notable changes include:

• ESG and Similar Shareholder Proposals. ISS has implemented a broad shift in how it considers shareholder proposals that call for disclosures or reports on climate change, greenhouse gas emissions, diversity policies and initiatives, political contributions and human rights policies and standards. Rather than its prior policy of defaulting to a FOR vote on such matters, it will now consider them on a case-by-case basis.
• CEO Pay vs. Performance. In evaluating CEO pay versus performance, ISS is moving to a 5-year look back from a 3-year look back to assess the degree of alignment between total stockholder return (TSR) and the CEO’s annualized total pay rank within the company’s peer group and the rankings of CEO total pay and financial performance with the peer group. With respect to the multiple of the CEO’s pay relative to peer group median, the firm will now look at trailing 1- and 3-year periods instead of just the most recent fiscal year.
• Equity Award Evaluation. If ISS’s methodology suggests unsatisfactory executive pay-versus-performance alignment, it considers several factors in assessing whether various pay elements encourage or undermine long-term value creation. For 2026:
  • It now only considers the ratio of performance- to time-based long-term incentive awards (previously it was all time-based incentive awards); and
  • It now considers vesting and/or retention requirements for equity awards that demonstrate long-term focus.
• Director Compensation. The new policy presents a more granular description of the circumstances under which the firm will vote against directors who set non-employee director compensation. It will now recommend withhold or against votes where there is a pattern (i.e., two or more consecutive or non-consecutive years/across multiple years) of awarding excessive or otherwise problematic non-employee director compensation without disclosing a compelling rationale or other mitigating factors. In addition, adverse recommendations may be warranted in the first year for director pay issues that are considered egregious.
• Dual/Multi-Class Voting. ISS will now consider two new exceptions to its general policy of voting withhold or against directors where a company has a common stock multi-class capital structure with unequal voting rights. The two new exceptions are where:
  • Convertible preferred shares vote on an “as-converted” basis; or
  • The enhanced voting rights are limited in duration and applicability, such as where they are intended to overcome low voting turnout and ensure approval of a specific non-controversial agenda item and “mirrored voting” applies.

Additional changes are outlined in the policy document.

On November 20, 2025, the Securities and Exchange Commission (SEC) announced that it has filed a joint stipulation with defendants SolarWinds Corporation and its Chief Information Security Officer, Timothy G. Brown, to dismiss, with prejudice, the SEC’s ongoing civil enforcement action arising from cybersecurity incidents impacting the company between 2019 and 2020. The SEC had charged the company and Mr. Brown with fraud and internal control failures relating to allegedly known cybersecurity risks and vulnerabilities and for misleading investors by disclosing only generic and hypothetical risks at a time when they knew of specific deficiencies in SolarWinds’ cybersecurity practices as well as the increasingly elevated risks the company faced at the same time. Many of the original claims were dismissed by a U.S. District Court judge in 2024; now the remainder have been dismissed. The case had raised concerns among some observers about the fairness of what can be viewed as punishing shareholders of companies that are the victim of cybersecurity attacks.

In a speech delivered before the New York Stock Exchange on December 2, 2025, SEC Chairman Paul S. Atkins articulated his vision for revitalizing America’s capital markets. Harking back to the founding of the country, the adoption of securities laws in the 1930s and rulemaking developments over the past three decades, he paints a picture of “regulatory creep” that has caused an erosion in American competitiveness in the public capital markets, an inability of average investors to invest in some of the most dynamic companies and entrepreneurs seeking capital outside U.S. public markets, either in the private markets or on foreign shores. He seeks to address this situation by “reform[ing] the SEC’s disclosure rules with two goals in mind. First, the SEC must root its disclosure requirements in the concept of financial materiality. Second, these requirements must scale with a company’s size and maturity.” He goes on to note that it is important to de-politicize shareholder meetings and return their focus to voting on director elections and significant corporate matters. Mr. Atkins also expresses a desire to reform the litigation landscape for securities lawsuits to eliminate frivolous complaints, while maintaining an avenue for shareholders to continue to bring forth meritorious claims. Lastly, he emphasizes raising capital through an IPO should not be a privilege reserved for those few “unicorns;” the SEC’s regulatory framework should provide companies in all stages of their growth and from all industries with the opportunity for an IPO to raise capital.

On November 17, 2025, the SEC issued a statement from the Division of Corporation Finance that announces a significant change in the Division’s involvement in the annual shareholder proposal season. Noting “current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention, as well as the extensive body of guidance from the Commission and the staff available to both companies and proponents,” the announcement indicates that the Division will not respond to (or express no views on) no-action requests from companies seeking to rely on Rule 14a-8 under the Securities Exchange Act to exclude shareholder proposals from their proxy materials, other than no-action requests seeking to exclude proposals under Rule 14a-8(i)(1). The Division notes that this policy applies to the current proxy season that runs from October 1, 2025 to September 30, 2026, as well as to no-action requests that were received by the Division before October 1, 2025, but for which the Division has not yet responded. See this Goodwin Client Alert for more discussion.

On November 19, 2025, the U.S. Court of Appeals for the Ninth Circuit issued an order granting in part and denying in part an injunction pending appeal requested by plaintiffs in litigation brought by the U.S. Chamber of Commerce and others challenging the constitutionality of the State of California’s Corporate Greenhouse Gas Reporting Program and the Climate-Related Financial Risk Disclosure Program. The order bars enforcement of the regulation referred to as SB 261, which requires public and private U.S. companies that do business in California with annual revenues of $500 million to publish biennial climate-related financial risk reports. The court declined to enjoin enforcement of the regulation referred to as SB 263, which requires business entities formed under the laws of California, the laws of any other state of the United States or the District of Columbia, or under an act of the Congress of the United States, with total annual revenues in excess of $1 billion that do business in California to annually disclose their scope 1, 2 and 3 emissions for the prior fiscal year.

In reaction, the California Air Resources Board (CARB) issued an Enforcement Advisory on December 1, 2025, indicating that it will not enforce applicable regulations implementing SB 261 against covered entities for failing to post and submit reports by the January 1, 2026, statutory deadline. CARB stated that it will provide further information—including an alternate date for reporting, as appropriate—after the appeal is resolved. Entities may voluntarily report relevant information through the agency’s newly released public docket.

On November 20, 2025, the Office of the Attorney General for the State of Florida brought suit in state court against ISS and Glass Lewis, charging the firms with violations of Florida’s antitrust laws and statutes against deceptive and unfair trade practices. The complaint asserts that “ISS has acted in concert with Glass Lewis to enforce extreme forms of ideological ESG, including gender- and race-based balancing and demands that every company focus on reducing greenhouse gas emissions.” The firms are alleged to have engaged in anticompetitive conduct in violation of Florida law by agreeing with each other to homogenize their services in the proxy advising market in the United States. In addition, they are alleged to have deceived Florida consumers through their statements, acts, practices, and material omissions (e.g., by claiming that they seek to maximize long-term shareholder value while their recommendations push policies that, according to the complaint, are not designed to maximize value at all, such as gender quotas or so-called ESG metrics). The State seeks injunctive relief and the imposition of monetary damages and penalties.

The SEC has released the agenda for its Investor Advisory Committee meeting on December 5, 2025. After introductory remarks from SEC Commissioners, the agenda includes:

• Panel Discussion: Regulatory Changes in Corporate Governance – addressing policy changes impacting the shareholder proposal process, the use of mandatory arbitration clauses, investor corporate engagement, and modifications to the proxy voting system.
• Panel Discussion: Tokenization of Equities: How Issuance, Trading, and Settlement Would Work with Existing Regulation – exploring the potential ways tokenization (the issuance of a token representing ownership of an asset on a blockchain) can improve how public equities are currently issued, traded, and settled while addressing how existing investor protections and securities laws apply.
• Discussion of Draft Recommendation Regarding the Disclosure of Artificial Intelligence’s Impact on Operations.