Podcast Summary: Why Executive Compensation Disclosure Is Poised for a Major Overhaul

The Corporate Director Podcast – April 8, 2026
Host: Megan Day (Diligent)
Guests: Kira Ciccarelli (Senior Researcher, Diligent Institute), Josh Black (Editor in Chief, Diligent Market Intelligence), Caroline Montalbano (Partner, Meridian Compensation Partners)

Episode Overview

This episode explores the anticipated overhaul of executive compensation disclosure rules by the SEC, offering both a review of recent trends in shareholder activism and practical advice for boards and compensation committees preparing for regulatory and investor scrutiny. Industry experts, including Caroline Montalbano of Meridian Compensation Partners, provide actionable insights on aligning executive pay practices with long-term strategy and transparency, as well as tips for navigating a rapidly evolving governance landscape.

Key Discussion Points & Insights

1. Proxy Season and Activism Trends

[01:09–08:03]

• Proxy Season is Now a Year-Round Phenomenon: The lines between traditional proxy season and off-season activism continue to blur. Ongoing activism, compensation debates, and regulatory activity are constant boardroom considerations.
• Josh Black on Shareholder Activism Insights:
  • There has been a slight decline in overall activism volume, but impact remains significant, with a record number of board seats changing hands and high CEO turnover (49 CEOs left US companies within a year of an activist campaign).
  • “There may be fewer and possibly more winnable proxy fights… but activism is still very painful.” (Josh Black, 03:15)
  • Activists are increasingly using tactics beyond traditional proxy fights, such as withhold campaigns, PR initiatives, and M&A-related activism (push-for-sale activism up 29% year-on-year since 2021).
  • The SEC’s redefinition of 13D rules means investors reveal less to companies, putting boards somewhat ‘on the back foot.’

2. Executive Compensation as an Activist Entry Point

[06:56–08:03]

• Compensation Scrutiny Increasing: Activists often frame executive compensation as symptomatic of broader governance or performance failures. This magnifies pressure on nominating and compensation committees.
• Activist Strategies are Evolving:
  • Campaigns now target individual committee members, leverage say-on-pay votes, and pressure companies through settlements and operational demands.
  • Notable Quote:
    • “Activist investors are talking about compensation more freely, targeting nomination committee members with withhold votes in some instances.” (Josh Black, 07:45)

3. Imminent SEC Overhaul of Executive Compensation Disclosure

[09:16–13:26]

• Regulatory Context:
  • The current executive compensation disclosure regime largely dates back to a 2006 overhaul and has since become complex and lengthy, often without delivering real value to investors.
  • The SEC roundtable and new rulemaking agenda promise to revisit and modernize the disclosure framework.
• Caroline Montalbano’s Insights:
  • Anticipation that the SEC will focus on modernizing disclosures to enhance investor understanding of board pay decisions, not just compliance.
  • Memorable Moment:
    • “We expect… some of the most meaningful changes to executive compensation disclosure in nearly two decades, which is incredibly exciting.” (Caroline Montalbano, 11:59)
  • Potential areas of simplification:
    • Reducing the number of executives disclosed.
    • Simplifying narrative requirements (e.g., the pay-versus-performance table).

4. Proactive Steps for Boards and Compensation Committees

[13:43–14:41]

• Three Key Actions:
  1. Clarity: Review current Compensation Discussion & Analysis (CD&A) for clear connections between strategy, goals, and pay outcomes.
  2. Documentation: Ensure robust documentation for all decisions (metric selection, goal setting, discretion, peer group definitions).
     • “If a compensation decision is hard to explain, it will probably be hard to disclose.” (Caroline Montalbano, 14:17)
  3. Plan Review: Regularly review compensation plans for alignment with long-term strategy and communicability.

5. Additional SEC Initiatives Impacting Disclosure

[14:51–16:17]

• Broad review of disclosure requirements across Regulation S-K, including governance, risk factors, and human capital.
• Potential new obligations for foreign issuers (Section 16A filings).
• Ongoing efforts to streamline shareholder proposal processes and modernize capital formation rules.

6. Top Board Actions for 2026 and Beyond

[16:31–17:16]

• Ensure the pay-for-performance narrative is clear, defensible, and transparent.
• Proactive shareholder engagement—to clarify expectations and gather feedback on disclosures before rules change.
  • “Stay proactive in your shareholder engagement… direct conversations with major shareholders.” (Caroline Montalbano, 16:48)

7. The Future of Compensation Governance: Trends & Scenario Planning

[17:35–18:09]

• Predictions: Boards should expect continued movement toward transparency and stronger alignment between executive pay and long-term value creation.
• Scenario Planning: Prepare for greater granularity in benchmarking and data transparency, and anticipate investor expectations for clear explanations of performance-based pay.

Memorable Moments & Notable Quotes

| Timestamp | Speaker | Quote/Insight | |-----------|---------|---------------| | 03:15 | Josh Black | "There may be fewer and possibly more winnable proxy fights from the issuer perspective, but activism is still very painful." | | 07:45 | Josh Black | "Activist investors are talking about compensation more freely, targeting nomination committee members with withhold votes in some instances." | | 11:59 | Caroline Montalbano | "We expect... some of the most meaningful changes to executive compensation disclosure in nearly two decades, which is incredibly exciting." | | 14:17 | Caroline Montalbano | "If a compensation decision is hard to explain, it will probably be hard to disclose." | | 16:48 | Caroline Montalbano | "Stay proactive in your shareholder engagement... direct conversations with major shareholders." |

Broader Board Governance Trends

The Boardroom in 10 Years

[18:28–19:24]

• Boards will have access to vastly more data through advanced analytics, real-time benchmarking, and AI-powered dashboards, freeing up time for strategy instead of chasing information.
  • “...as we see these data tools become more sophisticated, I think the boards are going to have much more direct access to market data...” (Caroline Montalbano, 18:41)

The Importance of AI Literacy for Directors

[19:31–20:12]

• Directors do not need to be AI experts, but must acquire basic AI literacy to properly oversee strategy and risk in the digital era.

Final Takeaways

• Scrutiny on Executive Compensation Is Rising: Activists and investors now use executive pay disclosures as entry points for broader strategic challenges to management and the board.
• Regulatory Overhaul Is Imminent: Boards and comp committees should stay ahead by ensuring their CD&A is clear and defensible, and by proactively engaging with investors.
• Future-Proofing Requires Data Savvy: The evolving disclosure landscape—and AI and analytics tools—will transform how directors access information and make decisions.
• Engagement is Essential: Direct, regular communication with key shareholders will be critical during and after the transition to new SEC rules.

Timestamps for Key Segments

• Proxy Season Trends: 01:09–08:03
• Compensation Activism: 06:56–08:03
• New Disclosure Regime: 09:16–13:26
• Board & Committee Preparedness: 13:43–14:41
• SEC Broader Agenda: 14:51–16:17
• Board Actions Moving Forward: 16:31–17:16
• Future of the Boardroom: 18:28–19:24

For board directors and governance professionals, this episode is an indispensable briefing on the coming wave of executive compensation regulation and the practical steps necessary to stay ahead of investor and regulatory scrutiny.