As the 2026 proxy season begins, public companies are being advised to assess whether they will need additional shares for their equity plans over the next 12 to 16 months. This evaluation is important to ensure that any share demand needs before the 2027 annual meeting of stockholders are met. If more shares are required, companies should consider requesting approval from stockholders at the upcoming 2026 annual meeting. Otherwise, grants planned for the 2027 award cycle may have to be delayed until after the next stockholder meeting or be made contingent on a favorable vote at that time.
Modeling share requirements can take significant time and may involve both external advisors, such as legal counsel and compensation consultants, as well as internal discussions before involving the board of directors. Companies are encouraged to begin this process early.
Those seeking positive recommendations from Institutional Shareholder Services (ISS) and Glass Lewis must pay attention to these organizations’ criteria. For ISS, a key factor is the score under its Employee Plan Scorecard (EPSC), which is updated annually in December through FAQs. The EPSC evaluates three main aspects or “pillars” of an equity plan.
Whether ISS will recommend stockholder approval depends on whether a company’s score across all three EPSC pillars meets or exceeds a set threshold. However, certain negative overriding factors—such as an evergreen share reserve or allowing option repricings without stockholder approval—can lead to an adverse recommendation even if the overall score passes. These factors are listed in FAQ 37.
In December 2025, ISS introduced another negative overriding factor: if a plan receives an “insufficient” score under the Plan Features pillar (defined by ISS as lacking enough positive features), it could trigger a recommendation against the proposal if this pillar scores below seven points. The specific point distribution within this pillar is not disclosed by ISS, making it unclear which features would guarantee avoiding a negative override. Legal professionals and consultants familiar with the EPSC model can provide guidance on this issue.
“Early preparation is essential to a smooth and successful equity plan proposal at your upcoming annual meeting,” according to Cooley’s compensation and benefits group.
The information provided by Cooley serves general informational purposes only and does not create an attorney-client relationship. It does not constitute legal advice and should not replace consultation with qualified legal counsel.