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It appears that two of the major proxy advisory firms are out of touch with institutional and retail investors.
Two of the three major proxy advisors recommended AGAINST Mr. Musk’s historic Performance Award, whereas shareholders voted FOR the measure by over a 50-point margin. Egan-Jones was unique in supporting the package under its Wealth-Focused policy.
The Performance Award is designed to pay Mr. Musk up to $1T in stock if certain milestones are met, notably Tesla reaching an $8.5T market cap.
Few, if any, proposals in history have received such extensive publicity or resulted in retail investors being so well informed about the vote. Thousands of social media posts and hundreds of news articles have covered the plan and investor sentiment.
Days before the vote, news circulated online that Schwab had voted AGAINST Musk’s 2018 pay package in 2024 in many of their funds. This news was followed by a flurry of retail investors who threatened to leave Schwab if the brokerage didn’t vote for the 2025 Award. Two days before the vote, Schwab announced it would vote FOR the Award.
Egan-Jones Proxy Services is designed to offer investors meaningful choice. Clearly the pay package was popular with most investors. Those investors should have a choice of proxy advice that aligns with their interests.
Conversely, Egan-Jones has four off-the-shelf policies that did not support the pay package. Investors disinterested in such an aggressive pay structure should also have their interests properly represented.
Issues arise when investors lack reasonable choice.