FTI Consulting Governance & Activism Briefing 2025

Following the briefing, our governance team has set out five takeaways for the period ahead:

1. Board Effectiveness

In assessing Board performance and effectiveness from afar, our panellists spoke about using certain criteria to evaluate Board skills and composition, including – but not limited to – experience in the sector, diversity (of gender, background, ethnicity, nationality), tenure and time commitments. In addition, skills matrices were identified as being particularly useful, not just for investor reviews but for companies when carrying out internal evaluations to ensure Board composition continues to evolve alongside strategy. Interestingly, the panel pointed to the overlap between shareholder engagement and effectiveness, noting that in their experience, shareholder engagement has improved their perception of how a Board is performing.

2. Remuneration

Despite attempting to avoid spending excessive amounts of time on remuneration – something each of the panel pointed to as being a bugbear of their own – there was no escaping its prominence. Pay will continue to be a hot topic in 2026; however, each panel member accepted the ongoing issues around pay competitiveness with companies operating in the US or on a global basis. In attempting to address that issue, investors and proxy advisors pointed to facts that would convince them change is needed, including a genuine global presence, evidence of staff churn (below C-Suite level) and peer sets against which companies are competing. During the Q&A, panellists noted growing leniency with regard to the level of bonus deferral in the UK & Ireland, with the caveat that its link to malus and clawback provisions remains a strong safeguard. One area that has been less prominent in pay discussions recently though is companies’ place in society. If remuneration levels are likely to be viewed (and covered by media) as tone deaf versus the experience of employees and society more generally, investors will find it harder to provide support to Boards and management, due to reputational risks but also as a result of asset owner pressure to address growing gaps between companies and the socioeconomic experience where they operate.

3. Glass Lewis’ New Compensation Model and “Voting Perspectives”

In January 2026, Glass Lewis will update its pay-for-performance model and expand its coverage to major Continental European and UK exchanges. The new model extends the review window from three to five years and adapts legacy tests to European disclosure norms, assessing CEO pay alignment with financial and TSR performance relative to peers. Additional tests will compare incentive payouts with TSR outcomes versus broad regional benchmarks. While qualitative factors will feed into numerical scoring, analysts will continue applying holistic, case-by-case analysis to pay proposals.

Glass Lewis also explained its plan to move away from a single “house view”. Starting in 2027, Glass Lewis will introduce four research perspectives reflecting different investor priorities, ranging from one generally aligned with management – except in cases of egregious behaviour – to one emphasising leading sustainability practices, with two intermediate perspectives blending governance and sustainability considerations. Glass Lewis confirmed that these perspectives will also apply to M&A and contested director elections, which will still undergo detailed, case-by-case analysis.

4. Preparing for Activism

During the final segment of the briefing, there was an emphasis placed on the importance of preparing for an activist situation, not only to reduce the likelihood of becoming a target, but also to limit potential harm to the company and long-term shareholders, should an activist build a position and decide to engage. Effective preparation begins with a candid assessment of vulnerabilities in valuation, TSR, financial and operational performance, and governance. Linking back to earlier discussions, we discussed how strong Board composition and proactive refreshment, ensuring alignment between directors’ skills and the company’s strategy, can reduce openings for activists. The discussions also highlighted the need for a clear rapid-response protocol that sets out the company’s initial steps when an activist makes contact. The focus should be on a pragmatic, usable plan – not a lengthy manual – defining the core internal response team and identifying the financial, legal, and communications advisors who will help navigate the situation and avoid early missteps in what can be a highly pressured environment.

5. Shareholder Engagement

The importance of effective shareholder engagement was stressed during both the governance panel and the activism-focused discussions. Against the backdrop of ongoing change in the governance, ESG and sustainability landscape, the governance experts extolled the impact of shareholder engagement on investor perceptions of companies, particularly on issues that may be raised through proxy voting at AGMs. Shareholder engagement remains central to investor trust in Boards and there is an expectation of proactive engagement from companies and access to Board Chairs. Strong shareholder engagement will make a material impact on proxy advisor recommendations and investor voting and, as the saying goes, the time to mend the roof is when the sun is shining; companies should not simply reach out to shareholders when there is an “ask” or potential voting risk.

The same point was emphasised in the context of preparing for activism. Building strong shareholder relationships in peacetime is key to maximising support in a contested vote. In doing so, companies shouldn’t overlook index funds. While active managers and hedge funds may shift positions as situations evolve, index funds will generally remain more constant and can play a decisive role should matters proceed to a vote.

The Team at FTI Consulting

Robust reporting and meaningful shareholder and proxy advisor engagement should remain priorities for companies as preparations for the 2026 proxy season ramp up. FTI Consulting’s Strategic Communications team brings together experienced corporate governance, ESG and communications professionals who have a deep understanding of the proxy advisory, stewardship and activism landscape with a proven track record in helping companies shape better outcomes through effective reporting and engagement.