5 things to know as protest against executive pay falls rapidly

5 things to know as protest against executive pay falls rapidly: It’s a notable reversal of a trend that’s been active for the last few years, as stakeholders try to exert as much influence as possible on the remuneration packages of senior leaders. 

Pushback against executive pay arrangements usually manifest at annual general meetings (AGMs) through what’s known as “say on pay” proposals. The latest data shows a significant drop in organised pushback in this area. 

It’s not localised either. We’re seeing the same trend developing across multiple economies, no matter the political apparatus in charge in each place. 

It’s a trend that will have a direct impact on countless boards of directors, particularly compensation committees and other leaders responsible for shaping executive remuneration. It can be quite a tense, or at least thoroughly discussed, area of corporate governance, so any changes to how it works require our attention.

Preliminary data around contested pay reports (essentially a raised flag on any instance of an executive pay vote being opposed by more than 10% of shareholders) was compiled by shareholder advisory firm Georgeson and reported by Reuters. Key takeaways for the past year included:

• Contested pay reports in Europe declined by six percentage points to 25.2%, the lowest level since 2018. 
• All of Europe’s top stock markets saw a similar trend of decline. 
• In the US, the average support for executive pay proposals rose from 89.7% to 90.4%. 
• In Japan, the share of executive pay proposals that were contested declined nearly 4 percentage points to 8.7%.

There are multiple factors fuelling this:

• Firstly, contested votes around executive pay tend to come from activist investors – investors who disagree with the direction of a company and consistently work to amass enough control to force big changes. Activists have varying degrees of success, but they have drawn the ire of US President Donald Trump, who has used executive power to increase pressure on them, largely through targeting the firms that represent their interests. However, we’re specifically seeing a drop-off in contested votes outside the US as well, in areas where Trump’s policies have minimal impact. So, we have to look further than activists to get the full picture. 
• In general, the 12 months to mid-2026 have seen overall growth. When it comes down to cash, investors are likely happier with performance than they were in the 12 months to mid-2025. 
• Crucially, the way boards and executives are changing their shareholder communication strategy looks to be paying off. It’s evident for many corporate leaders that speaking with shareholders before AGM time often yields more support for things like executive pay proposals. In many respects, it’s a core governance responsibility no matter the company or industry.

It’s often discussed in governance circles: the idea that if directors and key executives engage with shareholders outside proxy season and the actual AGM, it has significant benefits. 

The reason this argument gains a lot of traction is that it speaks to one of the most enduring principles of corporate governance: communication. Good governance revolves around good communication. It’s a pillar of good culture, and it gives leaders unmatchable influence both in times of normal business and crisis. 

Given the turbulent economic landscape of the 2020s, communication with shareholders beyond official points is even more essential. You have a much greater chance of smoother relationships and deep-throated support if shareholders understand your approach to business challenges how you’re using strengths, what you’re doing to manage risk, and how both will combine to positive results in a specified timeframe. You never need to wait till proxy season to communicate this. In fact, doing so often creates an “out of the loop” mentality, and that can quickly destroy confidence.

Executive pay is a touchy issue. There are many voices around the table. Some of them will argue for lower pay for executives because of the large gap between that and employee pay. Others will argue that getting the best talent at the top means providing the best remuneration. 

It’s a no-brainer that there are valid arguments on both sides, but for a board, the main challenge is finding a balance between the two. With more protest, finding the balance is harder, but with less, it’s easier. Boards have more wiggle room to approach, recruit, and develop talent that they think will lead their company properly.

Pushback against executive pay has also declined in Europe, even though it’s far away from any US-based hostility to activists, and generally features a much more collaborative political culture with more voices at the table. So, why are we seeing similar declines?

The performance reason mentioned above is a significant factor, but the European context is another. Remember, it’s a bloc that behaves as one country in some ways, but as multiple in others. Germany, for example, actually saw a spike in contested pay votes in the last year. There also remains a good deal of scrutiny on future pay policies in Europe, signalling that any approval of current pay packets is short-term. 

When the market performs well, everyone’s happy, and the market seems to be a big factor in why executive pay is facing less resistance. 

But if there’s one thing we know about the global economy of the 2020s, it’s that the market fluctuates wildly on the back of escalating geopolitical tensions and shocks like COVID. 

Because of that, if the market ventures back into negative territory, the debate around executive pay is likely to heat up again. In other words, boards and executives can’t get complacent. If they’re feeling goodwill now, there is no guarantee that they will feel anything similar in a year’s time.

This last point is centred more around the US and the role of proxy advisor firms, because it’s very clear now that this role is changing. Boards have often lived in active fear of proxy firms, especially if they make recommendations that could spell the end of certain members’ tenures or long-defended strategies. However, now, things are becoming more fragmented, meaning individual retail investors have more say. That dilutes the power of proxy advisors in many contexts, but it also means that shareholder decisions become more unpredictable, with a wider bank of differing opinions to track.