Across the Board
Can Your Board Explain How It Reached Its Decisions?
Investors, regulators and courts are looking beyond board decisions to understand the process, evidence and governance that produced them
“Tesla’s long-debated executive compensation conversation is about far more than one CEO’s salary. The legal challenges surrounding Elon Musk’s compensation package along with ongoing investor scrutiny of governance at powerful founder-led companies have exposed bigger questions that boards everywhere should be asking themselves: if challenged, could we easily demonstrate how our most important decisions were reached? Today, investors, regulators and courts are looking way beyond board decisions. They want to understand the quality of oversight behind those decisions. What evidence was considered? Which risks were debated? Did directors have sufficient information to fulfil their fiduciary duties?” CEO WORLD
Fewer Shareholder Proposals, And Most Are Focused on Traditional Shareholder Rights
Structural changes in regulation and shareholder priorities are elevating governance issues, with lasting implications for boards and investor engagement
“A sharp rise in governance-focused shareholder proposals, a big shift in the SEC's proposal exclusion process and growing support for corporate moves out of Delaware are becoming the defining trends of the 2026 proxy season, according to Georgeson Advisory. While overall shareholder proposal activity continues to decline across Russell 3000 companies, early data suggest the season is being shaped less by the number of proposals and more by structural changes that could have long term implications for issuers, investors and corporate governance practices. According to Georgeson's 2026 Early Proxy Season Review, overall shareholder proposal activity has fallen 15 percent year-on-year to 710 proposals through May 15....The decline was focused on environmental and social proposals, which fell 39 percent and 36 percent respectively. Governance proposals, however, remained strong and accounted for 51 percent of all submissions, rising to 404 from 380 last season. The increase was driven largely by traditional shareholder rights proposals. Independent chair proposals nearly tripled to 92 from 33 last season...” GOVERNANCE INTELLIGENCE
The Board Roles Investors Scrutinize Most
Proxy voting trends show Nom & Gov Committee Chairs remain under the greatest pressure, underscoring shareholders' continued focus on accountability and independence
“Over the past five years, director support levels for all positions were at their lowest in 2023, though support has increased since then. However, median director support continues to vary depending on the director’s role. In particular, governance chairs continue to receive the lowest levels of support, which may be driven by ongoing shareholder concerns over issues for which they are generally held accountable…. Other factors also continue to affect director support. Notably, director support may decline based on an increasing number of public company board seats a director holds at a given time. Some investors may scrutinize these additional commitments, as concerns arise regarding a director’s ability to devote sufficient time to fulfill their responsibilities to a company and its shareholders. Furthermore, some investors may also consider the director’s role on the board in conjunction with these commitments.” HARVARD LAW SCHOOL FORUM ON CORPORATE GOVERNANCE
Rethinking Governance in a Volatile World
In an era of geopolitical, technological and regulatory disruption, effective boards are becoming more strategic and foresighted
“Across our client and stakeholder network, geopolitics, leadership and culture, innovation, cybersecurity, and sustainability – in that order – remain the priorities at the top of board agendas, where they have been for the past few years. However, what has changed – and continues to change at incredible speed – is the environment in which organizations operate. The disruptive forces of transformation are becoming increasingly nonlinear, accelerated, volatile and interconnected (NAVI), and that requires a different approach. For boards, the question now is not what are our priorities, but how should we deal with them to shape the next 12 months and beyond? While geostrategy may be the priority for those looking to make the biggest difference, boards must look at how they govern. The best – and possibly the only – way to cope with the NAVI environment, which has become our day-to-day reality, is to rethink the practical ways in which the board operates.” EY
CEO Succession: From Credentials to Behavioral Precision
The central question is no longer whether your board has the right leader at the top, but whether your board has the lens to know
“CEO turnover is rising at a pace not seen before. In the first four months of 2025 alone, 1,028 CEOs departed, 19 percent above the same period last year and the highest on record. In the S&P 500, the projected annual succession rate has reached 13 percent, up from 10 percent in 2024, with external hires now accounting for nearly a third of all appointments. Boards are making more leadership decisions, under more pressure, than at any point in recent history. In a system moving this fast, leadership change is often necessary. The problem is that the decisions are not getting better. The pattern is increasingly visible. Boards continue to search for the “complete” CEO; the individual who can balance transformation, execution, culture and market signaling at once. When that person inevitably falls short, the transition is labelled a failure. But the failure rarely sits with the individual.” CORPORATE BOARD MEMBER
AI's New Governance Challenge: Detection
Directors are being challenged to strengthen oversight by improving their ability to detect AI-related risks early, rather than reacting after harm has occurred
“Engineers have long relied on failure mode and effects analysis, or FMEA, to anticipate how complex systems can break down before they fail in the field. The method is useful because it does not treat risk as a single judgment. It separates the assessment of each possible failure mode into three questions: How severe would the failure be? How likely is it to occur? How difficult would it be to detect before harm is done? Corporate boards are coming up the learning curve on potential failure modes associated with AI. They understand AI applications across the business could lead to heightened data privacy issues, cybersecurity threats, intellectual property leakage, customer satisfaction concerns, regulatory risks and more.” DIRECTORS & BOARDS
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