The SEC stopped grading proxy exclusions. Now the board's lawyers do.

A response that arrives in nine cases out of ten has stopped carrying information ^[5]. Under the old practice, a staff letter was evidence that a regulator had looked at the merits and declined to disagree. The replacement is a receipt for the company's own representation that it had a reasonable basis to exclude ^[4]. The paper still comes back, but the reasoning behind it does not exist, and neither does the argument it used to hand a director who asked whether an exclusion would hold.

That is why the near-halving of exclusion requests in the Russell 3000 is the hardest number in the report to read ^[2]. The Conference Board review, written with ESGAUGE, Russell Reynolds Associates and Rutgers Law School's governance centre, does not attribute the drop to a single cause ^[3]. Two candidates point in opposite directions: companies conceding or including proposals they would once have fought, or companies facing fewer proposals worth the paperwork in a season when filings kept falling overall ^[9]. Only one of those is a governance win.

The chair's July defence rests on ratios ^[6]. Six suits at under 4% of proposals covered by exclusion notices implies a denominator above 150 ^[7][20], and the chair added that adverse proxy adviser recommendations were virtually nonexistent ^[8]. A market-wide rate is the right unit for a regulator assessing a policy and the wrong one for a company that meets the question once and cannot spread it across 150 proposals. Concentration sharpens that further: the report puts 70% of filings with a single proponent ^[11], so much of the exposure tracks one counterparty's appetite for litigation.

The vote data explains why few boards will want to test any of it. Human capital management proposals fell nearly 60% from 2024 and averaged 6% support ^[12]. Anti-ESG filings held roughly steady and roughly doubled their support to 5%, but strip out the National Legal and Policy Center's CEO/chair separation items and the average sits just under 2% ^[13]. Governance support lost five points year on year, a 13% relative decline ^[22]. Proposals defeated by those margins are cheap to lose on the ballot and expensive to keep off it.

The directors carrying that calculus are already the least popular on the card. Average director support reached 95% across the Russell 3000 and the number of directors below 70% fell 24% over two years ^[16], while nominating and governance committee chairs remained the lowest-supported committee chairs ^[17]. Say-on-pay went the same quiet way, with 76% of proposals clearing 90% approval against 72% in 2024 and 2025, though nearly a fifth stayed in the 70 to 90% watch band ^[14][15].

The activism figures close the loop. Campaigns fell nearly 75% from the 2024 peak ^[18] while the share aimed at proxy fights went from 7% to 38% ^[19]. Run the arithmetic and the absolute number of campaigns headed for a fight is roughly 1.4 times the 2024 level ^[21]. Fewer approaches arrive, and the ones that do arrive already dressed for a vote.