Key Takeaways
- Elon Musk labels proxy advisory firms ISS and Glass Lewis as “corporate terrorists” over their opposition to his $1 trillion pay package.
- The firms’ recommendations carry significant weight with passive investors who control large voting blocks.
- Musk’s compensation could reach approximately $1 trillion over 10 years if Tesla’s market value grows over 500%.
Elon Musk has launched a fierce attack against proxy advisory firms, calling Institutional Shareholder Services (ISS) and Glass Lewis “corporate terrorists” during Tesla’s earnings call. The Tesla CEO expressed frustration over what he called “asinine recommendations” that could potentially oust him despite his ambitious plans for the company.
Musk’s Explosive Comments
During Wednesday’s earnings call, Musk didn’t hold back his criticism. “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,” Musk stated. “I mean, those guys are corporate terrorists.”
Musk also took to his social media platform X to amplify his criticism, with ARK Invest CEO Cathie Wood echoing similar sentiments about proxy advisory firms.
The Power of Proxy Advisory Firms
Musk argued that these firms wield excessive influence, particularly over passive investors like index funds that manage substantial voting power on behalf of clients. “ISS and Glass Lewis have no actual ownership themselves and often vote along random political lines unrelated to shareholder interests!” he claimed. “This is a major problem that is not just limited to Tesla.”
While proxy advisory firms only provide recommendations rather than casting votes directly, major investors including BlackRock, Vanguard, and State Street typically conduct their own research before making voting decisions. Both ISS and Glass Lewis had previously recommended against Musk’s 2018 pay package, though shareholders ultimately approved it.
Glass Lewis maintained to Fortune that its role is strictly analytical, providing recommendations while shareholders make the final decisions. ISS declined to comment, and Tesla did not immediately respond to requests for comment.
The $1 Trillion Compensation Package
The controversy centers around Musk’s potential $1 trillion compensation package over 10 years, contingent on meeting specific performance targets. With a current net worth of $455 billion, Musk stated he needs “an ownership stake in the mid-20s approximately” to achieve his Tesla goals.
The most ambitious target requires increasing Tesla’s market value by more than 500% to reach $8.5 trillion. Both advisory firms have raised concerns about the package’s unprecedented scale and potential dilution of other shareholders’ stakes.
Tesla defended the compensation structure, arguing that standard pay benchmarking doesn’t apply to Musk since no other company has “remotely similar goals embodied in their compensation programs.” Glass Lewis noted that Musk’s 2025 performance award is approximately 33.5 times larger than his 2018 package and “outpaces all other pay packages” on both realizable and granted bases.
Frequently Asked Questions
Why did Elon Musk call ISS and Glass Lewis “corporate terrorists”?
Musk used the term because he believes these firms exercise excessive influence through shareholder voting recommendations that aren’t based on actual ownership or company interests.
How much is Elon Musk’s Tesla pay package worth?
If Musk meets all performance targets, his compensation package could amount to approximately $1 trillion over 10 years.
What are the main performance targets for Musk’s pay package?
The primary target involves increasing Tesla’s market value by more than 500% to $8.5 trillion.
Do proxy advisory firms directly vote on shareholder matters?
No, they only provide recommendations. Major investors like BlackRock and Vanguard conduct their own research before making independent voting decisions.
