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Billionaire Elon Musk has criticized proxy advisers Institutional Shareholder Services (ISS) and Glass Lewis for having too much power over the voting decisions of passive investment funds.
In a January 23 tweet, Musk argued that “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.”
Last year, ISS and Glass Lewis recommended votes against two Tesla directors up for a vote at the company’s August 2022 annual meeting over the board’s “insufficient responsiveness” to a prior shareholder vote. On that occasion, both directors received support of 64% and 68.3% according to Insightia’s Voting module.
Musk’s criticism is the latest in a long-running debate over whether such advisers have too much sway over corporate decision-making.
Corporate executives have historically offered the most criticism of the two proxy advisers when they have urged shareholders to vote against board recommendations. Climate activists have also criticized the advisers when seeking support for environmental shareholder proposals.