Elon Musk Says Proxy Advisors ‘Effectively Control the Stock Market’

  • Elon Musk said proxy advisory firms ISS and Glass Lewis have an excessive amount of influence. 
  • “ISS and Glass Lewis effectively control the stock market,” he tweeted late Monday. 
  • Musk added that many investors hold stocks in passive index funds, meaning shareholder voting decisions are “outsourced” to the advisories.

Elon Musk said proxy advisory firms Institutional Shareholders Services and Glass Lewis have an excessive amount of sway over the stock market. 

The firms offer recommendations to shareholders on find out how to they need to vote on management proposals at company meetings.

“Far an excessive amount of power is concentrated within the hands of ‘shareholder services’ firms like ISS and Glass Lewis, because a lot of the market is passive/index funds, which outsource shareholder voting decisions to them,” Musk tweeted late Monday. “ISS and Glass Lewis effectively control the stock market.”

He was commenting on an initial tweet from Vivek Ramaswamy, the founding father of Strive Asset Management, who said ISS had a “staggering” amount of influence over investors and corporations. 

ISS and Glass Lewis didn’t immediately reply to requests for comment.

The Securities and Exchange Commission estimated in 2019 that each proxy advisors combined control 97% of the marketplace for voting advice. 

Last 12 months, they supported a proposal to extend investors’ ability to nominate board members and urged votes against two Tesla directors.

The resolution passed, however the two directors remained on the board, albeit with less support than is typical.

And in 2018, ISS and Glass Lewis also urged Tesla shareholders to vote against a proposal for a $2.6 billion performance-based stock option grant for Musk. The proposal still passed.

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