October 30, 2026
By Molly J. Bowen
The 2026 proxy season brought major changes relevant to pension fund administrators and trustees.
- While the total number of shareholder proposals fell to a five-year low in 2026, governance-related proposals—covering board accountability, voting rights and oversight—surged to a five-year high and received the strongest investor support.
- On August 14, 2026, the Securities and Exchange Commission (SEC) announced that it would permanently exit its traditional role of reviewing shareholder proposal disputes and subsequently sought to rescind Rule 14a-8. This shift limits investors’ ability to communicate and raise concerns with the companies in which they invest, reducing information available to fiduciaries.
- While not restricted to the proxy season, several companies reincorporated from Delaware to other states, resulting in a greater variance in shareholder protections.
This blog post will cover the major developments and how they impact administrators and trustees.
Fiduciary Responsibility for Management of Proxy Rights
As the Department of Labor (DOL) stated in a technical release issued in April 2026, “voting rights and other shareholder rights attributable to shares held by ERISA-governed employee benefit plans are plan assets in their own right” and so “management of those rights is subject to ERISA’s fiduciary duties, including the duty of prudence and loyalty.”
It is the DOL’s view “that the management of proxy rights is fiduciary in nature.” Accordingly, fiduciaries should ensure that they have a reasoned process for exercising their voting and other shareholder rights; exercise appropriate oversight over proxy advisors, investment managers and other third parties involved in the proxy voting process; and exercise their rights as shareholders when doing so is relevant to protecting or enhancing the plan’s value.
Governance Proposals Dominate Proxy Season
The proxy season typically starts in the spring and is when most public companies hold their annual shareholder meetings and file their annual DEF 14A proxy statements with the Securities and Exchange Commission (SEC). The proxy is a key opportunity for shareholders to vote and express their views on issues such as executive compensation, board member elections and shareholder proposals.
In addition to litigation, shareholders can express concerns and their priorities to the companies in which they invest by making nonbinding proposals. Frequent topics for proposals include opposition to executive pay packages and requests for the company to provide disclosures on issues such as political lobbying, human capital management or plans for navigating environmental issues.
These two topics received the most attention in governance proposals in 2026.
- Independent board chairs: These proposals advocate for separating the role of chief executive officer (CEO) and board chair.
- Shareholder-rights measures: These proposals included allowing shareholders to ask for special additional meetings other than the annual meeting or board declassification, which switches election of the board to annual for all directors instead of staggered elections.
On average, 31.4% of shareholders voted in support of governance proposals, which is significantly higher than other types of proposals.
Key takeaway for fiduciaries: Investors sent a clear message that they believe that board independence, accountability and shareholder rights are core measures of good governance—a conclusion consistent with academic research. Pension funds may wish to consider whether their proxy voting guidelines pay particular attention to or take a position on these issues or understand why they do not.
The SEC Withdraws From the Proxy Process, and More Proxy Disputes Head to Court
The SEC’s withdrawal from the shareholder proposal process fundamentally altered proxy season dynamics. Historically, when a company wanted to exclude a shareholder proposal from its proxy statement, it would submit a request for guidance to the SEC staff through the “no-action” process. This system provided a staff review of disputes between companies and shareholders. But during the 2025-2026 proxy season, the SEC conducted a “proof of concept” in which it stopped providing substantive guidance with a limited exception for certain state law disputes. The SEC stated that this decision was intended to free up resources for other agency responsibilities, and that the agency had determined that its role in the process was unnecessary and better left to market participants or the states.
Initially, companies acted cautiously and placed more proposals on ballots. But by season’s end, exclusion rates had returned to historical norms, with companies excluding roughly one-third of proposals and approximately 64% proceeding to a vote.
With the SEC stepping back, shareholders increasingly turned to litigation, alleging improper exclusion of shareholder proposals. Many of these suits resulted in quick settlements in favor of the shareholder seeking inclusion of their proposal on the proxy. Just one day after a shareholder filed suit against PepsiCo for excluding its shareholder proposal, the company settled and agreed to put the proposal on the ballot. In another notable settlement, Axon Enterprise (maker of Taser products) agreed to provide annual political spending disclosures for five years. These settlements illustrate how litigation may produce outcomes that might previously have been negotiated through the shareholder proposal process.
This summer, the SEC took the next step to make its experiment permanent. On August 14, the SEC’s Division of Corporation Finance announced it would no longer respond to any no-action requests under Rule 14a-8, including those based on state law arguments, claiming this change will allow it to redirect staff resources to other priorities. Then, on September 16, the SEC issued a proposal to rescind Rule 14a-8 altogether, arguing that it exceeds the agency’s statutory authority and intrudes on matters traditionally governed by state corporate law. The SEC said the rule’s original justifications are less compelling today and may have discouraged states from developing their own shareholder proposal frameworks. The public comment period is currently set to close on November 16, 2026. To date, the SEC has more than 30 comments, including a number of requests by large institutional investors for an extension of the public comment period.
While the exact contours of what sorts of shareholder proposals are required to be placed on a proxy pursuant to Rule 14a-8 has been the subject of debate and changed in form across various recent presidential administrations, its core purpose to allow eligible shareholders a voice in corporate governance of publicly traded companies has not wavered until now. Indeed, this rescission echoes other steps the SEC has taken over the past year to limit shareholder rights in holding boards accountable for any corporate wrongdoing, with some institutional investor organizations calling it “an attack on the fundamental rights of shareholders.”
Key takeaway for fiduciaries: Without SEC staff review and the traditional Rule 14a-8 process, it appears that shareholders and companies face an unclear landscape that may result in increased litigation, in the absence of a clear process for communication mediated by the SEC. If the SEC’s September 16 proposal is adopted, it will shift fiduciary governance from a federal, shareholder-rights framework to a framework specific to state law and company policies. This could weaken investors’ ability to proactively raise governance, risk management and executive compensation concerns while allowing greater board discretion, subject to state rules. While critics of the rescission say that removing the proxy process may push parties toward litigation, increasing costs and burdens on shareholders and companies, supporters of the rescission say it would reduce costs and limit proposals that are unrelated to shareholder value. Pension funds should ensure their proxy voting advisors have a system to monitor exclusion decisions and be prepared for more governance disputes to be resolved through litigation or direct engagement rather than regulatory guidance.
Texas Reincorporation Raises Questions About Shareholder Protections
While the changes were not specific to the proxy season, lately, an increasing number of public companies have reincorporated from Delaware (the historic home of most U.S. corporations) to Texas and Nevada principally. From January 1, 2024 through July 1, 2026, a total of 33 public companies with a market capitalization of at least $250 million reincorporated from Delaware, with 20 going to Nevada and 11 to Texas. However, five public companies reincorporated from other states to Delaware, raising the total number of companies incorporated in Delaware by 15% from 2024 to 2025, ending that year with 2.2 million business entities in Delaware. Companies frequently cite Texas’s legal environment, lower taxes and fees, and lower litigation risk as key draws to the state. ExxonMobil and Dell Technologies are notable recent examples of companies reincorporating to Texas. Why does this matter? Texas recently enacted laws allowing companies to restrict shareholder rights, including limiting shareholders’ ability to bring certain lawsuits. While ExxonMobil publicly stated it would not adopt Texas’s optional provisions restricting shareholder rights, Dell indicated it would. Leading proxy advisors Glass Lewis and ISS and certain shareholder advocacy groups opposed both reincorporation proposals, but they were approved by large margins.
Key takeaway for fiduciaries: Pension funds should be aware that a company’s jurisdiction now directly affects whether they can protect their interests through proposals or litigation, and even within a single jurisdiction like Texas, their rights will depend on what aspects of the corporate law a company opts into. Fiduciaries may benefit from periodic updates from consultants and investment managers on how this new variation and attendant risk is managed within the overall portfolio.
The Bottom Line for Pension Fund Fiduciaries
The 2026 proxy season marked a major shift from an SEC-mediated process to private ordering among companies, shareholders and the courts. Simultaneously, it saw an increasingly varied landscape of shareholder rights as companies reincorporated to new states. Given these shifts, it is not surprising that good governance continues to be a top priority for investors. The balance between management authority and shareholder rights will remain one of the defining debates heading into 2027—and pension funds that stay informed and engaged will be best positioned to fulfill their fiduciary duties.
Read 2026 Proxy Season: What Pension Fund Fiduciaries Need to Know .