Tesla’s quarterly earnings call on Wednesday concluded with CFO Vaibhav Taneja and CEO Elon Musk urging shareholders to support the Board’s proposals in the upcoming Annual Meeting.
The comments were made after two proxy advisory firms — Institutional Shareholders Services (ISS) and Glass Lewis — recommended to vote against the CEO’s compensation plan.
Both Tesla and the Board’s Chair Robyn Denholm fired back at the companies, encouraging shareholders to ignore the recommendations.
Earlier on Wednesday, a third proxy advisor, Egan-Jones, weighed in.
However, while they would vote positively considering their wealth-focused policy, the proposal wouldn’t pass on any other framework.
“The meeting will shape the future of Tesla,” the company’s CFO said on late Wednesday, noting that “it is a team sport” and “the Board is an integral part of the winning team.”
He added that the company wants shareholder support not only regarding the CEO’s pay packages, but also through “the reelection of Ira [Ehrenpreis], Kathleen [Wilson-Thompson], and Joe [Gebbia] to the board.”
Elon Musk remarked that “the point is that I just need enough voting control to give a strong influence, but not so much that I can’t be fired if I go insane.”
According to Egan-Jones, if Musk’s proposal succeeds, his Tesla ownership could increase to 28.8% — which, in the advisor’s opinion, could further reducing shareholders’ influence over company decisions.
“I think that sort of number is in the mid-twenties approximately,” the CEO commented, later adding that “there is no way to have a supervoting stock after you’ve gone public.”
On Tuesday, Denholm also dismissed concerns that the plan would reduce investors’ ownership, explaining that the proxy advisors’ preoccupation missed the point that “the pie must increase by more than seven-fold” to get to dilution.
To Musk, it is about not feeling “comfortable” investing in AI and robotics on Tesla if he could be “outsted” at any moment.
Musk had already shared this idea in early 2024, stating he wanted 25% voting power to feel secure in pursue these projects in the company. Otherwise, he would “prefer to build products outside of Tesla.”
“I just don’t feel comfortable building a robot army here and then being ousted because of some asinine recommendations from ISS and Glass Lewis who have no freaking clue,” he reaffirmed on Wednesday.
According to Musk, “the core problem here is that so many of the index funds, passive funds, vote along the lines of whatever Glass Lewis and ISS recommend,” despite “many terrible recommendations in the past.”
Later on X, the CEO reiterated the idea, saying that half of all publicly traded shares are held by passive index funds, which usually delegate their voting to advisory firms like ISS and Glass Lewis.
Musk wrote that “ISS and Glass Lewis have no actual ownership themselves and often vote along random political lines unrelated to shareholder interests!”
According to the CEO, there are also inconsistencies in the recommendations.
“[…] they recommend voting against re-electing one of our excellent longstanding directors, Ira Ehrenpreis, for “insufficient gender diversity,” but, at the same time, also recommend voting against re-electing Kathleen Wilson-Thompson!”
Two years ago, Elon Musk accused ISS and Glass Lewis of controlling the stock market because they influenced passive or index funds.
Over the past years, the chief executive has been referring to the firm as ‘ISIS’ on several posts on X — referring to the terrorist organization.
On Wednesday, he repeatedly said the recommendations made by Glass Lewis and ISS were “corporate terrorism.”
Unlike the 2018 pay deal — which ISS and Glass Lewis also recommended shareholders to vote against — and according to Reuters, Musk will be allowed to vote in the upcoming Meeting.
The compensation plan proposed by the Board — which can reach $1 trillion — is tied to Tesla achieving a $7.5 trillion market capitalization, along with the deployment of 1 million Robotaxis, and 1 million Optimus humanoid deliveries.
