Elon Musk Says Proxy Advisors Hold Too Much Sway in Stock Market

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(Bloomberg) — The rise of passive investing has given third-party proxy advisors like ISS and Glass Lewis too much influence in the stock market, Tesla Inc. Chief Executive Officer Elon Musk said.

Elon Musk

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Elon Musk

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“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 in a tweet late Monday in the US. “ISS and Glass Lewis effectively control the stock market.”


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In 2020, ISS recommended Tesla shareholders should vote against the re-election of chair Robyn Denholm because directors were being highly compensated and pledging significant amounts of stock for personal loans. And in 2018, ISS and Glass Lewis recommended voting against Tesla’s plan to give Musk an equity award valued at $2.6 billion, saying the extraordinary size couldn’t be justified. 

Institutional Shareholder Services and Glass Lewis & Co. dominate the proxy advisory industry where fund managers contract third parties to advise on the votes for the shareholders in their funds.

Read more: SEC Votes to Free Up Proxy Advisers, Shareholder Proposals 

Business groups have long complained ISS and Glass Lewis hold outsize influence over corporate governance that allows them to set the standards for US boardrooms, thanks to investors’ reliance on their recommendations.

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