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ISS-Corporate Forecasts Key Themes for Unprecedented 2026 U.S. Proxy Season
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Global Trends in Women’s Corporate Leadership 2026

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    Executive Compensation

    Time for Performance: Can extended equity vesting periods break the dominance of performance-based compensation?

    Performance based CEO awards have long been championed by proxy advisors and investors as the best way to align executive incentives with shareholder outcomes. Despite this broad market consensus, some investors have begun to show support for simpler equity structures that de-emphasize performance- in favor of longer time equity vesting periods.

    Norges Bank, the investment arm of Norway’s sovereign wealth fund, is one of the most prominent proponents of an extended equity vesting period. The bank argues that performance based equity can be expensive and complex and result in higher overall compensation than non-performance-based plans with an extended equity vesting period.

    And Norges Bank isn’t alone. An ISS survey found that there was meaningful investor openness to dispensing with performance based equity under certain circumstances, particularly when time based awards featured sufficiently lengthy vesting periods.

    Download the report to discover:

    • Key insights: Companies that incorporate performance-based awards generally show stronger long-term shareholder returns and more measured CEO compensation growth than companies that rely solely on time-based equity.
    • The rising interest in long-term vesting equity structures signals that the market is beginning to acknowledge a more nuanced spectrum of long-term compensation design choices.
    • Potential Challenges: Despite the dominance of performance-based awards, companies need to be aware of the support for alternative approaches to stay abreast of evolving compensation norms.