Musk tweets proxy voting firms have 'far too much power'

January 24, 2023 02:54 AM PST | By Reuters
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LONDON (Reuters) - 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 pension schemes 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.

(Reporting by Simon Jessop; Editing by Sharon Singleton)


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