Key Focus Areas for the Comp Committee in 2026

As boards look ahead to the 2025-26 compensation cycle, Pay Governance has surfaced a dozen hot button issues sharping the conversation. Here are a few that stand out.

Say-on-Pay: Whose Voice Counts More? The once tidy alignment between proxy advisors and institutional investors may be starting to fray. Pay Governance notes a widening gap in say-on-pay outcomes, signaling that large investors are increasingly charting their own path rather than following proxy advisor recommendations.

• Implication: Committees need to deepen direct engagement with investors, then tailor disclosures and outreach to address investor-specific perspectives rather than relying solely on proxy advisor check-the-boxes.

Rethinking the LTI Vehicle Mix: Performance shares have long dominated the equity landscape, but there are signs of increased opportunity for a more differentiated equity mix. Critiques of PSU effectiveness and evolving views from ISS and Glass Lewis on time-based shares with extended vesting (see story above) suggest that the “one-size-fits-all” equity mix may be waning.

• Implication: Forward-thinking committees are exploring future possibility and sharpening communications to ensure employees, investors, and advisors understand the “why” behind design choices. Be on the lookout for a new Center piece from Charlie Tharp on this very topic!

Pay Decisions in Challenging Sectors: For companies navigating multi-year stock declines, reduced realizable pay creates added tension. Boards must strike a delicate balance: retaining and motivating executives while demonstrating restraint and alignment with shareholder outcomes.

• Implication: Transparent communication can help save a Say-on-Pay vote. Think: clear proxy disclosures, committee chair letters, and proactive shareholder engagement that explain the rationale, link pay decisions to strategy and reinforce governance discipline.

Goal-setting and alignment with TSR are under the microscope. Proxy advisors are zeroing in on how committees adjust performance targets, especially when “reductions” are tied to macroeconomic disruptions.

• Implication: Generally, metric selection and performance targets should cascade from the long-term strategy. While it will not always be a linear progression, a reasonable glide path is expected. A WTW piece does a nice job of highlighting the inputs into the process.

Other issues being discussed: The article also flags growing attention to executive security practices, shareholder outreach challenges and executive succession planning- reminders that compensation strategies never exist in a vacuum. It’s not just about getting pay right- it is telling the story right.