Both of the major U.S. proxy advisors — Institutional Shareholder Services (ISS) and Glass Lewis — have made major announcements in recent days. ISS announced its draft policy updates for 2026, which include several substantial changes to its framework for evaluating executive compensation. And Glass Lewis announced that it will no longer issue benchmark (or “house”) vote recommendations starting in 2027.
Executive compensation professionals, public company boards of directors, and compensation committee members will want to understand the implications for their companies. Following is a breakdown of the most important updates to watch.
ISS’s draft policy updates for 2026 include some of the most substantial proposed changes on executive compensation topics since the advent of say on pay 15 years ago.
The proposed change with the widest impact is that “time-based equity awards with extended time horizons will be viewed positively.” However, ISS defines neither “extended time horizons” nor “positively.”
Our expectation is that ISS’s “extended time horizons” will be five or more years, and that ISS will view a five-year restricted stock unit (RSU) as favorably as a three-year performance stock unit (PSU). Our article “U.S. proxy advisor updates: Calm before the storm?” provides a deep dive into the build-up to this announcement.
ISS also proposes modifying its pay-for-performance screening to evaluate longer time horizons. The Relative Degree of Alignment test would look back at five years of total shareholder returns (TSR) and CEO pay (an extension from three years). The Multiple of Median test would examine CEO pay against peers over both a one-year period (which has been its legacy approach) and a three-year period (which is new).
A proposed update to ISS’s responsiveness policy would introduce leniency for companies that are unable to obtain specific feedback from shareholders despite meaningful engagement efforts. Such companies would only need to disclose:
This update is a response to recent U.S. Securities and Exchange Commission (SEC) staff guidance on Schedule 13G eligibility that chilled shareholder engagement this year.
Although ISS will continue to apply its excessive director pay policy that identifies directors receiving unusually high compensation (generally the top 0.5% to 1.0%) in consecutive years, a proposed update would allow — in extreme circumstances — for negative vote recommendations in cases of “problematic or unreasonable pay in the first year of occurrence or in the event of a pattern identified across non-consecutive years.”
Finally among the compensation updates, ISS proposes two new factors in its Equity Plan Scorecard:
All of these updates are merely proposed changes. ISS is taking comments on these and other updates through Nov. 11, 2025, and expects to announce final 2026 policy updates by the end of November. ISS typically then releases FAQs in December or early January, where we expect additional details to be unveiled.
ISS also recently announced that it is launching two new custom services: Gov360 will deliver analysis without vote recommendations, and Custom Lens will enable its investor clients to customize not only the vote recommendation (which they have been able to do for many years) but also the data and analysis that appear in the report.
Beginning in 2027, Glass Lewis will stop issuing its standard benchmark vote recommendations. Instead, all of its vote recommendations will be based either on an investor’s custom voting instructions or on Glass Lewis’s thematic voting policies. In the meantime, the firm will still issue benchmark vote recommendations for 2026 shareholder meetings.
Although this announcement represents a major shift, we do not believe that the practical impact for U.S. companies will be as substantial as the headline might suggest.
These are arrangements through which the client provides the proxy advisor with its voting policies. Then, the proxy advisor marries those policies against its analysis to determine a vote recommendation for that client.
For instance, Vanguard might instruct a proxy advisor to provide it with a custom report recommending against any equity plan proposal where annual burn rate exceeds 4%. In fact, one institutional investor may have several different sets of custom voting instructions for a proxy advisor to implement, because the institution may have varying stewardship priorities at the individual fund level.
These are pre-packaged Glass Lewis policies that set forth criteria for vote recommendations based on a point of view. Investors can choose from the following Glass Lewis thematic voting policies in the United States:
Most of the differences among these thematic voting policies lie outside the sphere of executive compensation; these policies generally adhere to Glass Lewis’s benchmark policies for say on pay, equity plans, and other compensation proposals. However, a climate-focused policy might recommend against say on pay at an extractive company if it does not include a climate-focused metric in its incentive programs. Meanwhile, the anti-ESG policy might recommend against say on pay if a climate-focused metric appears in an incentive program.
Although the headline represents a sea change, we think that the practical impact of this announcement will be muted for most U.S. issuers:
These global updates are in response to an increasingly challenging and fragmented operating environment for these proxy advisors. In the United States, the SEC and certain state governments (especially Texas) are exerting pressure on not only the proxy advisors but on their institutional investor clients. Also, many large asset managers are distancing themselves from the proxy advisors’ standardized methodologies. Meanwhile, European asset owners are advocating more strongly than ever for tougher approaches to environmental and social concerns, and for long-vesting RSUs and options to be treated as favorably as PSUs.
Table 1 below presents the landscape for proxy advisor vote recommendations in 2026 and 2027.
| Issue “benchmark” vote recommendations based on proxy advisor’s internal voting guidelines by country/region | Enable clients (i.e., investors) to provide custom voting instructions or select a thematic voting policy | Require clients (i.e., investors) to provide custom voting instructions or select a thematic voting policy | |
|---|---|---|---|
| Glass Lewis | 2026: Yes 2027+: No |
Already in place | 2026: No 2027+: Yes |
| ISS | Ongoing | Already in place | No |
