The 2025 proxy season unfolded against the backdrop of a new federal administration, changes to the regulatory landscape and evolving investor sentiments on a variety of issues. Based on our experience and data compiled by Diligent, key takeaways include the following:

• Say-on-pay – Consistent with years prior, say-on-pay proposals received a high level of shareholder support, with an average of 90% of votes cast in favor of such proposals in both 2025 and 2024. Among the reasons for “no” votes in 2025 were perceived misalignment with pay vs. performance, problematic pay practices identified by proxy advisory firms and the payment of special awards or “mega-grants.”

• Withhold Campaigns – A notable feature of the 2025 proxy season was the use of “withhold” or “vote no” campaigns, in which shareholders oppose and advocate that other shareholders oppose the re-election of incumbent directors without nominating alternative candidates. These campaigns can be an attractive alternative for activists wanting to avoid the costs and expenses of pursuing a full proxy contest.

• Universal Proxy – 2025 was the third full proxy season following the effectiveness of Rule 14a-19, which requires management and dissident shareholders to use universal proxy cards in contested elections. Some commentators predicted that the universal proxy card would benefit activists by making it easier to support one or more non-management candidates on an individual basis without committing to the activist’s entire slate. In the first half of 2025, activists sought to elect 216 directors and successfully obtained 112 board seats. 103 of those seats (92%) were obtained via settlement, with only 9 of those seats (8%) won through a vote. To the extent that proxy contests did proceed to a vote, shareholders appeared willing to elect only part of an activist slate—for example, electing three of the four directors from the activist slate to the board of Air Products and two of the four directors from the activist slate to the board of Phillips 66.

• Diversity, Equity and Inclusion – Several developments—including changes to proxy advisor and institutional investor voting guidelines on board diversity, the vacating of Nasdaq’s board diversity listing rule and the Trump administration’s executive orders on DEI initiatives—caused companies to reconsider their board diversity commitments and related disclosures, with many softening their existing disclosures, focusing on “belonging,” “inclusion” and merit-based practices rather than on “diversity” and “DEI.”  Institutional shareholders such as BlackRock and Vanguard revised their voting guidelines to remove diversity targets, but retained flexibility in their guidelines permitting engagement with or votes against boards whose composition is inconsistent with market norms or does not reflect sufficient diversity of personal characteristics.

• Board and Committee Governance

• Proxy statement disclosures revealed varied approaches to the oversight of AI and technology. At some companies, oversight of technology resides with the full board, while at others, such oversight resides with either an existing committee (e.g., audit or governance) or a newly formed committee dedicated to technology.
• In recent years, it had become commonplace for DEI and climate change to be listed among the matters overseen by board committees. This year, some companies removed such responsibilities from their committees altogether or replaced them with alternative descriptions such as “inclusion” and “sustainability.”

• Executive and Director Perquisites – Executive perks are increasingly seen as essential risk-management and safety practices. The SEC views executive security arrangements as disclosable perquisites, even if the company considers them to be necessary business expenses. Under Item 402 of Regulation S-K, the aggregate incremental cost to the company of providing a perquisite or personal benefit must be reported in the “All Other Compensation” column of the Summary Compensation table. The SEC has brought 21 enforcement actions against public companies for not properly disclosing executive perks over the past decade, most recently against Express Inc. in December 2024.

CARB Held Second Public Workshop on Climate Disclosure Laws

On August 21, 2025, CARB hosted a virtual public workshop with stakeholders to discuss California’s climate disclosure mandates—the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). These laws will require companies “doing business in California” within certain revenue thresholds to publicly disclose their greenhouse gas emissions and climate-related financial risks. Several key proposals addressed by CARB are summarized below.

Covered Entities

• CARB has proposed that certain entities be exempt from reporting under SB 253 and SB 261, including: (i) companies whose only business in California is the presence of teleworking employees, (ii) non-profits, (iii) government entities, (iv) the California Independent System Operator and (v) business entities whose only activity in California consists of wholesale electricity transactions. Insurance companies are also exempt from reporting, as set forth in the enacting legislation.

• CARB has proposed using the list of “active” entities on the California Secretary of State’s Business Entity database to determine which companies are “doing business in California.” This database is publicly available and lists any entity with a designated agent for service of process in California.

• CARB has proposed defining “revenue” as “the total global amount of money or sales a company receives from its business activities, such as selling products or providing services.” This definition does not deduct operating costs or other business expenses.

• CARB has proposed identifying subsidiaries through evaluation of commercial databases, cross-referenced with the Secretary of State and/or the Franchise Tax Board databases.

Reporting Process and Deadlines

• SB 261 – Covered entities must comply with SB 261 by January 1, 2026. The docket for companies to post the link to their climate-related financial risk report will open on December 1, 2025 and close on July 1, 2026. Notwithstanding that the docket will remain open past the compliance deadline, CARB reiterated that companies must have published their report to their website by the January 1, 2026 deadline. Posting on the public docket will be mandatory.

• SB 253 – CARB proposed a June 30, 2026 deadline for covered entities to report their Scopes 1 and 2 emissions under SB 253. The compliance deadline for Scope 3 reporting remains under review but is anticipated to be in 2027. CARB announced that it will post draft Scope 1 and 2 reporting templates under SB 253 by the end of September 2025 for public feedback.

Fee Structure

• CARB proposed a “flat” fee per regulated entity calculated as: Annual Program Cost/Number of Covered Entities, adjusted annually for inflation. Companies reporting under both SB 261 and SB 253 will be required to pay fees for each regulation. Because fees are calculated by covered entity rather than filing entity, subsidiaries filing via a parent company will be subject to a separate fee.

SB 253 Assurance Requirement

• SB 253 requires covered entities to have their emissions data verified by an independent third party. For the initial reporting cycle in 2026, CARB will require limited assurance, with a shift to reasonable assurance beginning in 2030. CARB is considering and seeking public feedback on the following potential standards: (i) ISSA 5000 (IAASB), (ii) AA1000, (iii) ISO 14060 family and (iv) AICPA.

CARB Released Draft Guidance on SB 261

On September 2, 2025, CARB released draft guidance on SB 261 (codified in Health and Safety Code Section 38533), which requires companies “doing business in California” with over $500 million in revenue to publicly disclose their climate-related financial risks in a biennial report, with the first reports due by January 1, 2026. The draft guidance provides a checklist to assist covered entities with preparing their initial report, but CARB notes that the checklist does not have the force of law and does not impose requirements beyond the statute. Key guidance includes the available reporting frameworks and the minimum disclosure requirements.

Second Circuit Reinstates 10b-5 Claims Based on Hypothetical Risk Factor Disclosure

On August 27, 2025, in the case of City of Hialeah Employees’ Retirement System v. Peloton Interactive, Inc., the U.S. Court of Appeals for the Second Circuit reinstated Rule 10b-5 claims against Peloton arising out of, among other things, hypothetical risk factor disclosures.

Nasdaq Proposed Changes to Its Listing Standards

On September 3, 2025, Nasdaq proposed updates to its initial and continued listing standards, which include:

1. a $15 million minimum market value of public float (up from the current $5 million minimum threshold), applicable to new listings on Nasdaq under the net income standard;
2. an accelerated process for suspending and delisting companies with a listings deficiency that also have a Market Value of Listed Securities below $5 million; and
3. a $25 million minimum public offering proceeds requirement for new listings of companies principally operating in China.

Nasdaq said its proposals follow a proactive review of trading activity, “particularly emerging patterns associated with potential pump-and-dump schemes in U.S. cross-market trading environments.”

Select Recent Securities Law Legislation Proposals

A summary of selected recent securities-law related legislation proposed in August 2025 follows.