Tesla has responded to ISS and Glass Lewis — the world’s two largest proxy advisory firms — after they issued recommendations on CEO Elon Musk’s pay package that will be voted on at the upcoming Annual Shareholders Meeting.
The Board of Directors proposed in early September an equity award of $1 trillion for the chief executive, tied to the achievement of a $7.5 trillion market capitalization.
The pay package is also linked to the successful development and deployment of the Humanoid and Robotaxi products.
Late last week, Institutional Shareholder Services (ISS) recommended Tesla shareholders to vote against the CEO award in the meeting on November 6.
According to the proxy advisor, “there are unmitigated concerns surrounding the special award’s magnitude and design.”
The firm further added that the pay package “locks in extraordinarily high pay opportunities over the next ten years” and “reduces the board’s ability to meaningfully adjust future pay levels.”
Glass Lewis joined ISS on Monday, stating that the potential dilution to shareholders and other terms of the proposed pay plan “warrant significant concern.”
Together, ISS and Glass Lewis control over 90% of the proxy advisory market, meaning that institutional investors who use proxy advisory services rely on one of these two firms for guidance.
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.
Last year, Glass Lewis also recommended shareholders to vote against Musk’s compensation package, to which the company replied that the proxy firm “omits key considerations, uses faulty logic, and relies on speculation and hypotheticals.”
According to a statement issued by Tesla on Monday, “ISS and Glass Lewis have recommended against Tesla‘s proposals time and time again since the 2018 CEO Performance Award was introduced.”
The company noted that “it’s a good thing our shareholders ignored those recommendations otherwise they may have missed out on our market capitalization soaring by 20x from March 2018 to August 2025.”
Tesla stated that these recommendations are “misguided” and disregard “the fundamental purpose of public companies and who they serve — the shareholders.”
They are also an “attempt to override the mandate our shareholders delivered to Elon” back in 2018.
Several investors have applauded the compensation package, as they believe that it will be crucial to keep the chief executive focused on Tesla for the next decade, after his political activity earlier this year.
Musk has purchased Tesla shares for the first time in five years, currently owning 413 million shares.
According to a SEC filing last month, the CEO now has about 13.5% of voting power.
Unlike the 2018 pay deal, and according to Reuters, Musk will be allowed to vote in the upcoming Shareholder Meeting.
Tesla further added that the recommendations against the pay package “ignore the staggering financial results delivered under Elon’s leadership.”
The company urged shareholders to “vote yes to robots, not robotic voting,” submitting a positive vote on all proposals of the Board.
The company is expected to report third-quarter financial results next Wednesday (October 22), after market close.
The brand achieved record deliveries between July and September, prompted by the rush in EV demand ahead of the tax credit deadline on September 30.
Over the past three months, Tesla‘s stock has jumped over 34.9%. The company is trading 3.6% higher at $443 on Monday’s market session.
Read Tesla‘s full statement below:
“ISS and Glass Lewis have recommended against Tesla‘s proposals time and time again since the 2018 CEO Performance Award was introduced.
It’s a good thing our shareholders ignored those recommendations otherwise they may have missed out on our market capitalization soaring by 20x from March 2018 to August 2025.
Now, Glass Lewis has followed ISS and issued another misguided recommendation that again disregards the fundamental purpose of public companies and who they serve – the shareholders.
These firms do not own Tesla – you do.
Glass Lewis’s one-size-fits-all checklists undermine shareholders’ interests, including by opposing proposals designed to build long-term value at Tesla.
The shortcomings of these proxy advisors are echoed by state and federal officials, who are scrutinizing ISS’s and Glass Lewis’s practices, including by implementing laws that require that their recommendations be based on the financial interests of shareholders, implying a failure to do so in the past and presently.
Shareholders have spoken twice on Elon’s 2018 CEO Performance Award.
ISS’s and Glass Lewis’s recommendations attempt to override the mandate our shareholders delivered to Elon and ignore the staggering financial results delivered under Elon’s leadership, elevating their rigid policies over shareholder value. Glass Lewis’s recommendations on Ira and Kathleen are indefensible.
Ira continues to drive major growth, having built an effective and tailored governance regime and brings technical rigor to Tesla‘s toughest product and strategy calls.
Kathleen has been a part of two of the most transparent governance processes in modern day corporate America and brings decades of legal, operating, compensation, human capital and management expertise critical to winning the AI talent war.
Vote yes to robots, not robotic voting. Vote with Tesla on ALL proposals.”
