2026 Pre‑AGM Season Review

Introducing our pre‑AGM season review

2026 marks the launch of our first pre‑annual general meeting (AGM) season review. Updates to the UK and Japanese Stewardship Codes in 2025 prompted us to re‑evaluate the stewardship reporting at T. Rowe Price Associates, Inc. (TRPA). We felt the time had come to repurpose our pre‑AGM season publication, which had traditionally focused solely on shareholder proposals, into a more wide‑ranging overview of governance developments across different regions.

Some commentators may have viewed the general trend of simplification which we saw in regulatory developments in the Americas and Europe this year as problematic for investors. We preferred to see this as an opportunity to focus on consistency of delivery, while also taking advantage of the policy tailwinds we continue to see in certain markets in the APAC region.

Our fiduciary duty is to meet our clients’ investment objectives, and we are privileged to serve the needs of a global and diverse client base. The vast majority of our clients have given us a mandate to deliver financial performance, while some have given us a dual mandate to deliver a sustainable objective alongside financial performance.

Across all mandates our voting process considers both high‑level principles of corporate governance and the circumstances specific to each entity. It includes significant involvement by investment analysts and portfolio managers. Our overarching objective is to cast votes in a thoughtful, investment‑centered way to foster long‑term success for the company and its investors.

This report sets out the developments our governance analysts are tracking in each region as we enter the 2026 AGM season, as well as the approved changes to TRPA’s proxy voting guidelines for 2026.

Americas: Key themes

How could SEC developments impact the 2026 AGM season?

Shareholder proposals on social, political or environmental matters have remained a controversial issue in the U.S. market in recent years. The 2021 proxy voting season was the high water mark for overall investor support of shareholder resolutions. However, since then in our eyes the quality of such resolutions has deteriorated, particularly in the U.S. and Canada, which together represent over 80% of all shareholder proposals filed globally.

The primary cause of this deterioration is what we would characterize as misuse of the shareholder proposal vehicle in these markets. Traditionally, the purpose of shareholder‑sponsored resolutions was understood to be for longstanding investors to offer nonbinding recommendations for consideration by other shareholders on ways a company might increase shareholder value or reduce its risks by improving transparency, oversight, or governance practices that were generally tied to value creation. Instead, the majority of resolutions are now designed to:

• Direct the company to change the mix of its business in a meaningful way
• Further a particular social or environmental cause having no connection to value creation
• Request reporting that the company already essentially provides, or to advocate for changes motivated by considerations other than long term performance.

In the U.S., the main driver behind this deterioration was a 2021 decision by the Securities and Exchange Commission (SEC) to adapt its interpretation of what types of resolutions were eligible to be added to a company’s proxy. Through Staff Legal Bulletin (SLB) No. 14L, the SEC allowed more proposals across a wider range of environmental and social topics to move forward. Our observation is that the increase in the volume of proposals was accompanied by a decrease in their overall quality. In February 2025, the SEC issued SLB 14M, which rescinded the prior guidance (SLB 14L) and reinstated earlier interpretive standards. The guidance was launched so close to the start of the 2025 AGM season, that this will be the first full cycle where we can expect to see the impact on proposal quality.

In November 2025, blaming a backlog from the federal government shutdown and other priorities, the SEC announced that it will not respond substantively to most no‑action requests under Rule 14a‑8 during the proxy season from October 1, 2025 through September 30, 2026. It is expected that this pullback in staff involvement will leave U.S. companies with more freedom to decide whether to exclude shareholder proposals. However, in some cases companies may decide it is better to include the shareholder proposal on the ballot because of the risk of negative publicity, increased votes against directors or litigation from the filers if it is excluded. At the same time frequent filers at U.S. companies say they expect to continue to file proposals, so we are yet to see what impact the SEC announcement will have on how the 2026 AGM season plays out.

Regulatory scrutiny prompts proxy voting reviews

In December 2025, President Trump signed an executive order which aims to increase oversight of the proxy advisory industry—especially the largest two firms, Institutional Shareholder Services (ISS) and Glass Lewis. The executive order asks regulators to review whether more action is needed, and while they are unlikely to report before the U.S. AGM season, this remains a key development to watch.

Given the regulatory scrutiny, many asset managers are reviewing their proxy voting workflow and two at least are moving away from the ISS and Glass Lewis duopoly. J.P. Morgan Asset Management (JPMAM), has announced that it will no longer use external proxy advisors to cast its votes at U.S. companies and has launched an internal artificial intelligence (AI)‑powered platform, called Proxy IQ, to develop independent voting recommendations. Wells Fargo has also launched its own internal proxy voting system, supported by data from Broadridge. Industry observers will be watching closely how these new solutions perform for their first AGM season.

2025 saw an uptick in reincorporation proposals by Delaware companies. States such as Nevada and Texas amended their corporate laws in 2025 to capitalize on the trend. Research by Glass Lewis¹ showed that in 2025, of the 18 companies that proposed leaving Delaware, 13 sought to move to Nevada and two proposed reincorporation to Texas. This trend is expected to continue in 2026, particularly for companies with a significant or controlling shareholder.

One to Watch: Will 2026 see more “moonshot” pay plans?

At the 2025 AGM of Tesla Inc all eyes were on the new CEO equity award, given the quantum. This award is structured in 12 tranches, each valued at more than USD 7 billion over the next 10 years, and sets very ambitious targets, which appear highly unlikely to be reached. This award could grant Elon Musk 12% incremental ownership of the company. Most TRPA portfolio managers see the prior similar award, which was granted to the CEO in 2018, as having incentivized Mr. Musk to deliver significant value for shareholders, and retaining his services for the next decade with the 2025 award is key to their investment thesis. However, while these portfolio managers believe the award is well aligned with shareholders’ interests, several TRPA strategies voted AGAINST this proposal, including one with a significant position, citing concerns about the magnitude of the award. The new CEO equity award received 76.6% support from shareholders.

Moonshot awards are typically found at technology companies and are designed to incentivize management to undertake genuinely stretching “bet the company” objectives. In January 2026, video game and consumer  electronics retailer GameStop announced a performance‑based stock option award for its Chairman and Chief Executive Officer. For the award to fully vest, the company’s market capitalization would have to grow to USD 100 billion and the company would need to achieve USD 10 billion in Cumulative Performance EBITDA (earnings before interest, taxes, depreciation and amortization). Under the award, Mr. Cohen’s compensation is entirely “at‑risk,” and the plan will be put to a shareholder vote at a special meeting in March/April 2026.

In 2026 we expect to see a number of the largest U.S. private AI companies begin preparations for listing—though it is not yet clear how the AI leaders will approach pay.

Changes to our Americas proxy voting guidelines

TRPA’s current policy guidelines state that we may vote against directors that exhibit such a high number of board commitments that it causes concerns about the director’s effectiveness. Traditionally in the Americas region, concerns about overboarding arise with:

(1) Any director who serves on more than five public company boards; or

(2) Any director who is CEO of a publicly traded company and serves on more than one additional public board.

However, in recent years there have been several instances that necessitated an override of this policy. The most common overrides include cases when a company’s subsidiary is also publicly traded and either shares the board with the subsidiary or has significant overlap between the two boards—or one of the companies included in the count is a non‑operating company, such as a special purpose acquisition company. As a result, for 2026 a director at a company in the Americas will be considered overcommitted if he or she:

(1) Serves on more than six public company boards; or

(2) Serves as a CEO of a publicly traded company and serves on more than two additional public boards.

Our longstanding approach has been to consider the nominees’ potential contribution including skills, experience and demographic background when deciding how to vote on director appointments. To better reflect our actual practice, we have implemented a new board composition guideline for all regions this year.

EMEA: Key themes

U.S. executive orders result in diversity rollback for some European firms

In February 2025 President Trump issued a series of executive orders targeting diversity, equity, and inclusion programs in the public and private sectors. Certain European companies for whom the U.S. government is a major customer responded by reviewing their diversity initiatives, and in the off‑season we saw several European companies consult on removing diversity metrics from their variable pay plans, typically measuring women in senior leadership. We therefore expect this diversity rollback to be a notable feature of the 2026 AGM season.

Competitive pay is high on the agenda

The theme of competitiveness continues to be high on the policy agenda in Europe. The main point of tension in the UK market continues to be globally competitive pay, with proxy advisors being blamed as barriers which prevent companies from making their case for either non‑standard quantum or structure. Investors deny this interpretation, pointing instead to their willingness to consider non‑standard plans with sufficient explanation. The UK investor trade body, the Investment Association, published its 2026 Executive Pay Guidelines in November. The guidelines said that explanations should be more company specific, providing high‑quality information about why decisions are made, why it is right for the company’s business strategy and how it will impact its future success.

As seen during off‑season remuneration consultations, fairly modest pay adjustments have been proposed at UK and European companies, with a number of companies seeking to soften the vesting curve of their equity plans. While the gold standard remains no vesting below the median of the peer group for relative measures, we are seeing pushback on this from some companies who claim that a less stretching curve is the norm for their market. We are also seeing that UK remuneration committee chairs have recognized that the bonus deferral expectations in the UK are so stretching that they can make the pay packages unattractive to international candidates in cash terms. Instead, a number of remuneration committees are seeking to soften the deferral conditions once the executive shareholding guidelines have been met.

A sometimes‑overlooked aspect of competitiveness is non‑executive pay, particularly given it is much more common in the U.S. to pay directors a mix of cash and equity. The UK Financial Reporting Council confirmed in November 2025 that non‑executive directors may have a portion of their fees in shares (for example, purchased at market price) designed to boost alignment between directors and shareholders. However, performance‑related remuneration remains inappropriate, as it may compromise the director’s ability to challenge executive decisions.

One to Watch: Virtual AGMs are gaining ground, while investors prefer hybrid meetings

The direction of travel on virtual‑only AGMs is towards greater acceptance by companies and national regulators, even if some investors remain wary. For example, in October 2025, a new decree under the Italian capital markets law allowed virtual‑only meetings or participation solely through the company‑designated representative via a “closed‑door meeting.” In December 2025, the GC100, the group of general counsel and company secretaries working in the largest UK‑listed companies, published guidance to support UK companies that wish to hold virtual‑only shareholder meetings. This was in anticipation of the government’s proposed update to the UK Companies Act 2006 to clarify that virtual meetings of shareholders are permitted.

The implementation across the European Union varies by market, but Germany allows fully virtual AGMs without any physical attendance as a permanent option with shareholder approval. Initially the market consensus was that while a five‑year authorization was legally permitted, companies sought two years as a market norm  while practice was still developing. Companies are now becoming more familiar with the logistical implications. As an example, global technology company Siemens AG requested a five‑year authority at the 2026 AGM but committed to hold at least one meeting with physical presence during the five‑year period. The preference from investors is typically to have a hybrid meeting, but the increased complexity and cost mean this request does not align well with policymakers’ focus on competitiveness.

Changes to our EMEA proxy voting guidelines

The first change we have made relates to the pro‑rata of long‑term incentive plans (LTIPs) when a CEO transitions to a non‑executive Chair role at a French company. While we think a non‑executive Chair should not receive a new equity grant, we do not think that the Chair—if he or she has taken decisions aligned with our interests as shareholders—should be stripped of the inflight LTIPs for the year that the Chair is solely in a non‑executive role. However, where the Chair has made poor decisions for shareholders, we will vote against the remuneration.

The second change relates to our stance on holding directors accountable for unequal voting rights at companies in continental Europe where there was evidence of these structures enabling management to undertake decisions not aligned with our interests as shareholders. Exceptions to this policy will generally be limited to newly public companies with a sunset provision of no more than seven years from the date of going public, or situations where the unequal voting rights are considered de minimis or where the company already provides sufficient protections for minority shareholders.

APAC: Key themes

Japan and South Korea lead the way on shareholder activism

Shareholder activism in the APAC region will be a key theme heading into the 2026 AGM season, with Japan and South Korea continuing to set the pace. Momentum that accelerated from 2023 has carried through 2024–2025 and into early 2026, and campaign intensity and sophistication are expected to remain elevated.

Japan is expected to remain the center of shareholder activism in APAC. The Tokyo Stock Exchange’s sustained focus on cost of capital and price‑to‑book ratios has reshaped the engagement environment, providing external validation for investor pressure across a range of governance issues. With valuation dispersion still wide and many Prime Market companies trading below book value, the economic rationale for activism remains intact. In 2025, we observed a growing emphasis on governance‑related shareholder proposals, with pay‑related proposals almost doubling. We expect this trend to continue in 2026, with greater focus on board effectiveness, director accountability and executive remuneration.

Domestic investors drive change in South Korea

In South Korea, activism is expected to remain driven by both international and increasingly vocal domestic investors. Attention is likely to stay focused on “chaebol” governance, where opaque ownership structures and past controversies continue to weigh on valuations and minority shareholder protections. Investor expectations around capital returns remain elevated, with growing emphasis not only on share buybacks but also on the cancellation of repurchased shares, reflecting concerns that retained treasury stock can perpetuate control. While the South Korea Composite Stock Price Index (KOSPI) was one of the best‑performing benchmarks in 2025, gains were concentrated in a small number of names, suggesting continued pressure on many companies to improve governance and capital efficiency in 2026.

Investors monitor activity in China following 2024 reforms

China presents a different activism profile. Reforms to the Company Law in 2024 strengthened minority shareholder rights, including lowering the threshold for submitting shareholder proposals from 3% to 1% and placing greater emphasis on director and controlling shareholder conduct. While it remains unclear whether these changes will translate into a material acceleration of activist activity, investors are likely to monitor whether the enhanced framework results in greater board accountability and improved minority protections during the 2026 AGM cycle.

Catalyst for improved governance in Indonesia

Beyond the larger markets, there are also catalysts for governance improvement in smaller APAC markets. Rather than traditional activism targeting individual companies, Indonesia presents a different dynamic. Index provider MSCI has questioned the credibility of Indonesia’s capital market and raised the possibility of a downgrade from emerging market to frontier market status, citing concerns around free float, ownership transparency and disclosure standards. These issues are particularly relevant given historical deficiencies in basic disclosures, including information on board directors, at certain issuers such as state‑owned enterprises. We will continue to monitor disclosure quality and engage with companies on governance practices through the 2026 AGM season.

 One to Watch: What’s next for Toyota Industries’ privatization?

The proposed take‑private transaction of Toyota Industries by the Toyota Group has become a focal point for investor scrutiny and we expect it to remain closely watched through the 2026 AGM season. The initial offer price was criticized for materially undervaluing Toyota Industries, particularly given its holdings in Toyota Motor and its central role within the group’s industrial ecosystem. There were also concerns around the treatment of certain Toyota Group companies as minority shareholders for the purposes of the “majority of minority” approval calculation. While the offer price was subsequently revised upward, questions remain as to whether the final terms adequately reflect intrinsic value and fairly compensate minority shareholders. The transaction has drawn attention from activist investor Elliott, which disclosed a stake of approximately 7.1% and has urged shareholders to reject the offer. In March 2026, following a further increase in the offer price, Elliott agreed to tender its shares into the revised bid.

If the tender offer succeeds, Toyota Industries will convene an extraordinary general meeting (EGM) between April and May 2026 to approve measures supporting the privatization process, including delisting. The EGM and subsequent AGMs of other Toyota Group companies, including Toyota Motor, are likely to serve as a referendum not only on the transaction itself, but also on broader issues of board accountability and minority shareholder protection. Beyond Toyota Industries, the outcome will likely have wider implications for Japan, where more than 200 listed subsidiaries remain and investors will be assessing whether governance reforms meaningfully constrain controlling shareholders in group restructuring transactions.

The securities identified and described are for illustrative purposes only, do not represent recommendations to buy or sell any security, and do not represent securities purchased or sold by T. Rowe Price. No assumptions should be made that an investment in the securities mentioned was or would be profitable. The views and opinions above are subject to change, are those of the authors and may differ from those of other associates/and or T. Rowe Price Group companies.

Changes to our APAC proxy voting guidelines

2026 sees a renewed focus on board diversity in Hong Kong. We scrutinize companies with single‑gender nomination committees that fail to provide a compelling explanation, consistent with the revised Hong Kong Exchange’s Corporate Governance Code (effective 2025). We also plan to look closely at boards with less than 25% female representation as at the end of 2025.

In Japan we propose to vote against directors of listed subsidiaries where the board is not majority independent, in line with Japan’s Corporate Governance Code. This proposal reflects increasing market scrutiny of listed subsidiaries, as Japan continues to have the highest number of listed subsidiaries among developed markets.

In India we will vote against audit committee members and potentially the full board where we see poor accounting practices, fraud, material misapplication of accounting standards, or unresolved material weaknesses. Given recent high‑profile accounting and governance controversies in the Indian market, this will strengthen accountability for audit oversight.

 

How companies can engage with TRPA

The central contact point for inbound engagement requests on ESG topics to TRPA is through the shared inbox, engagement@troweprice.com. This allows our globally distributed team to see all incoming requests in a single location.

Companies wanting to engage in a market sounding with T. Rowe Price should contact our Compliance team via our Market Soundings shared inbox, Market.Soundings@troweprice.com.