In the latest issue of The Corporate Executive, I published a piece titled “An Ode to Shareholder Engagement: Turning the Page in 2026.” In the article, I posit the potentially controversial thesis that the “modern” era of shareholder engagement – which was ushered in by the advent of the Say-on-Pay requirement in 2011 – has ended, and in 2026 we enter a new era for engagement that is marked by significant technological, business and regulatory changes that could have an enduring impact on the shareholder engagement landscape for public companies.

Looking back 15 years to the dawn of Say-on-Pay, we can observe that the seemingly innocuous advisory, non-binding vote on executive compensation certainly changed the game when it comes to shareholder engagement. In the article, I recount the practices that developed to facilitate robust engagement with shareholders on executive compensation, corporate governance matters and any number of ESG issues. The article notes:

A positive outcome of these “modern” engagement efforts is that companies and institutional investors were generally able to have an active dialogue about the issues that were important to both the companies and the institutional investors. While criticism has inevitably focused on the extent to which asset managers and proxy advisory firms articulated a specific agenda through their proxy voting guidelines and company engagements (particularly on topics such as climate, ESG and DEI), companies were at least able to benefit from the opportunity to present their perspectives for consideration by significant shareholders, and in many cases both sides benefited from the exchange of viewpoints.

The article notes that the curtain began to fall on the modern era of engagement last year, with the Corp Fin guidance indicating that the ability to file on Schedule 13G could be jeopardized when an investor explicitly or implicitly conditions its support of one or more of the company’s director nominees at the next director election on the company’s adoption of its recommendation with respect to certain governance and ESG matters, or when the investor states or implies that it will not support one or more of the company’s director nominees at the next annual meeting unless management makes changes to align with the shareholder’s expectations as articulated in its voting policies. Beyond the immediate impact of shutting down engagement meetings for a brief period at some asset managers, the long-term impact has been to make shareholder engagement activities more one-sided and potentially less effective. The trend calls into question the utility of engagement with certain asset managers, and while companies continue to seek out engagement opportunities, the incidences of productive engagement meetings seem to be on the decline, at least anecdotally.

The article also addresses significant changes on the investor side of the equation, with the Big Three announcing the establishment of separate stewardship teams focused on differing investment strategies during 2025 and the rise of “voting choice” or “pass-through” voting programs, which permit institutional and some retail investors to direct how their shares held by the fund are voted on proposals considered at company annual meetings. As these voting choice programs are adopted more widely, companies will have a more difficult time trying to understand how shares directed by the fund holder will be voted on proposals, altering the efficacy of engagement with a particular asset manager. Companies ultimately may need to pivot to much more “public” solicitation efforts that seek to reach the unknown investors participating in these voting choice programs.

Finally, I address the “elephant in the room” for engagement, and that is the role of the proxy advisory firms. Earlier this year, we have seen artificial intelligence enter the field, with JPMorgan Chase and Wells Fargo announcing plans to replace proxy advisory firms with internal proxy voting analysis powered by AI. At the same time, the proxy advisory firms are in the crosshairs of Texas, Florida and the federal government, with the outcome of legislation, rulemaking and investigations yet to be seen. Amidst the turmoil, Glass Lewis announced last Fall a pivot toward helping clients with more bespoke voting advice rather than maintaining a house policy, with these efforts facilitated by AI-powered technology.

If we have indeed entered the “post-modern” era of engagement, what will that mean for companies? Companies should continue to seek to engage with investors on executive compensation, governance, ESG and other matters (even if the investors are not necessarily engaging with them), and we should all be cognizant of the increasing role that technology plays in the voting recommendation and decision-making process when preparing proxy statements and other investor communications.

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– Dave Lynn