Two Powerful Companies Are Accused by Elon Musk of Controlling the Stock Market

The CEO of Tesla claims that ISS and Glass Lewis have tremendous power.

Elon Musk enjoys going after circles of influence. He seems to be on a mission.
Elon Musk Accuses Two Influential Companies of Controlling the Stock Market

Elon Musk enjoys going after circles of influence. He seems to be on a mission.

Slapping a renowned institution or icon seems to inspire him more than anything. He appears dedicated to opposing all kinds of power representations.

In recent weeks, Anthony Fauci, the immunologist who served as the public face of America's reaction to the Covid-19 outbreak, has come under fire from the Techno King, as he is called at Tesla (TSLA) - Get Free Report.

Despite the possibility that Musk and, more particularly, some of his businesses, like Tesla, could suffer as a result of such an attack. Progressives make up a big portion of the electric-vehicle market leader's clientele, who are frequently fervent supporters of Fauci.

But none of it has deterred Musk, who has stated that Dr. Fauci should be brought to justice.

He even made a vow via his Twitter microblogging service to release covid files that would criticize the health officials' dictatorial response to the outbreak. Dr. Fauci was also expected to be exposed by these COVID files.

Then Musk denounced the World Economic Forum, whose most recent meeting just ended in Davos, Switzerland. The billionaire charged that the forum was behaving like a despised global government. Thus, he has adopted the anti-elite and anti-globalist viewpoints of all political persuasions.

The software tycoon stormed out on Jan. 18 that "WEF is quickly turning into an unelected world government that the people never asked for and don't want."

READ: As Demand Declines, Tesla Lowers Prices Once More in China

ISS, Glass Lewis Possess "Far Too Much Power," Says Musk

His accusation against Davos has increased criticism of the meeting of leaders of civil society and the world's business and political elites.

Critics of the forum claim that the fact that Musk, the second richest man in the world, criticizes a group of individuals who are equally wealthy as he is shows that Davos is failing to accomplish the goals it set for itself.

Patriotic Millionaires, a group of wealthy people fighting for "equal political representation, a livable minimum wage and a fair tax system," blasted the World Economic Forum meeting in Davos as "largely irrelevant" and "little more than an exercise in self-congratulation for the world's elites to convince themselves that they're making a difference."

The billionaire hopes to at least permanently weaken his targets, if not cause them to quickly tumble from their pedestals under his assaults.

The global CEO is focusing on two other organizations that represent power, even though his criticism of Davos is still fresh.

The two biggest proxy advisory companies are Glass-Lewis and Institutional Shareholder Services. For Musk, the ISS and Glass Lewis are the true stock market masters. Their power is excessive in his opinion.

The two companies advise shareholders on executive compensation and board member elections. Their suggestions are taken into account and rejected.

Because so much of the market is comprised of passive/index funds, which delegate shareholder voting decisions to them, Musk decried the concentration of power in the hands of "shareholder services" firms like ISS and Glass Lewis on Jan. 24.

"ISS and Glass Lewis virtually control the stock market" as a result.

The first assault, as is typically the case with Musk, tries to establish the scene and raise the stakes. He is likely to intensify his attacks on the two companies in the upcoming days or weeks since they support the adoption of ESG (environmental, social, and corporate governance) standards. ESG is now Musk's number-one nemesis.

Separate requests for comment from ISS and Glass and Lewis received no response.

What Opinion Has ISS On That?

Twitter users, on the other hand, applauded Musk's accusation against them.

One Twitter user said, "These 'governance solution' companies are quite unsettling." "The phrase "recommends voting against/for" is a flimsy attempt to intimidate you into accepting their rule. I would never give them my vote. votes with a 97% market share equal total control."

Another user joked, "Ouch."

One Twitter user stated, "It is extremely vital to vote as an individual investor instead of leaving it up to these shareholder services' corporations who manipulate the stock market."

Between Musk and the two companies, there is animosity. For instance, ISS and Glass Lewis had advised against the hefty salary package Tesla's charismatic CEO received in 2018.

Musk's remuneration was the subject of a trial in November. A Tesla shareholder had complained about his anticipated $50 billion bonus, which was contingent on the company's financial and stock market success. Mid-November saw the trial's conclusion. The Delaware Court of Chancery's Chancellor Kathaleen McCormick has not yet rendered a decision from the bench.

Jim Woodrum, a clinical professor of executive education at Northwestern University's Kellogg School of Management, claims that ISS and Glass Lewis are subject to subdued criticism in the boardrooms.

"I think many would complain and then say something about Institutional Shareholder Services and Glass Lewis," Woodrum said. "If you ask experienced directors what their main gripe about the changes in the boardroom over the previous 20 years is."

A greater emphasis on conformity has replaced creativity, according to some, taking the pleasure out of being a director.

The operation and means of power acquisition of the two consulting firms were then described by Woodrum.

"Both companies have developed models of what they consider to be excellent governance. Both evaluate whether a particular firm deserves a "yes" vote on Say on Pay and if specific board members should be supported using different algorithms, he added.

Many institutions abide by their advice, but some additionally use their own employees in addition to paying for the services in order to decide how to vote for their shares.

The most intriguing aspect of these businesses is that their business model necessitates frequent changes to their policies. After all, ISS and Glass Lewis wouldn't be necessary if they had a clear set of regulations that were followed by all businesses.

Woodrum cautioned that boardrooms have grown reliant on ISS and Glass Lewis.

He claims that the most common boardroom discussion is, "What does ISS think about that?

As more businesses comply with the most recent directive from ISS and/or Glass Lewis, this has also resulted in a standardization of boardroom procedures, the professor claimed.

The professor thinks there is a way for the two consulting firms and the boards of directors to get along.

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