Tags: elon musk | tesla | proxy voting firm | stock market

Musk: Proxy Voting Firms Wield 'Far Too Much Power'

Musk: Proxy Voting Firms Wield 'Far Too Much Power'
Courtroom sketch of Elon Musk in federal court in San Francisco, Jan. 23, 2023 (Vicki Behringer for AP)

Tuesday, 24 January 2023 06:07 AM EST

Billionaire Elon Musk said in a tweet that the advisers that help guide shareholders on how to cast their votes at meetings of publicly traded companies had "far too much power," without citing specific examples.

Advisers, including Institutional Investor Services (ISS) and Glass Lewis, issue reports to institutional clients, such as pensions, suggesting how they should vote on everything from electing board members to signing off on pay and perks.

As companies increasingly face investor pressure over environmental, social and governance-related (ESG) issues, such as climate change, their role is in the crosshairs of a growing movement in the United States pushing back on such matters.

Musk, who owns Twitter, was replying to a thread begun by Vivek Ramaswamy, the founder of Strive Asset Management, who said it was "staggering" how much influence the biggest adviser, ISS, had on U.S. state investors, treasurers and companies.

ISS and Glass Lewis did not immediately respond to requests for comment when contacted by Reuters.

"Far too much power is concentrated in the hands of 'shareholder services' companies like ISS and Glass Lewis, because so much of the market is passive/index funds, which outsource shareholder voting decisions to them," Musk said.

"ISS and Glass Lewis effectively control the stock market."

The comments are the latest complaint by Musk about the functioning of markets and follow previous criticism over the way electric vehicle company Telsa, which he controls, is assessed by investors from an ESG perspective.

It also comes as he defends himself in a court case in San Francisco over claims he defrauded investors by tweeting on Aug. 7, 2018, that he had "funding secured" to take Tesla private.

Musk testified he was sure he had backing from Saudi financiers in 2018 to take Tesla Inc. private, but said the fund later backpedaled on its commitment.

At a trial in San Francisco federal court, Musk told the investors' lawyer Nicholas Porritt that he met on July 31, 2018, with representatives of Saudi Arabia's sovereign wealth fund, the Public Investment Fund, at Tesla's Fremont, California, factory.

Musk acknowledged he did not discuss a takeover price with representatives of the Saudi fund, but said they made clear they would do what it took to make a buyout happen.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
Billionaire Elon Musk said in a tweet that the advisers that help guide shareholders on how to cast their votes at meetings of publicly traded companies had "far too much power," without citing specific examples.
elon musk, tesla, proxy voting firm, stock market
372
2023-07-24
Tuesday, 24 January 2023 06:07 AM
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