Cathie Wood, CEO of ARK Invest, believes that Tesla Inc. CEO Elon Musk’s new compensation plan will be approved during the shareholder meeting next month. This prediction comes amidst criticism from the International Shareholder Services (ISS), which has recommended that investors vote against the plan.
A Decisive Victory
Wood shared her thoughts on the ISS’s opposition to Musk’s pay package on social media platform X. She stated that when shareholders first voted on Musk’s 2018 pay package, Tesla was not part of any index, and the package won decisively. Similarly, during the second vote, which was forced by an activist Delaware judge, Tesla was 1.2% of the S&P 500, and the pay package still won decisively. Wood noted that Tesla currently stands at 2.4% of the S&P 500, which is not enough for index funds to swing the vote. She expressed confidence that Musk’s new package will win decisively.
“When shareholders first voted on @elonmusk’s 2018 pay package, #Tesla was not in any index, and the pay package won decisively… Now $TSLA is 2.4% of the S&P 500, and the pay package will win decisively.” - Cathie Wood
Criticism of Index-Based Investing
Wood also criticized the ISS’s recommendation, stating that it is sad that institutional shareholders rely on proxy firms to tell them how to vote. She argued that index funds do no fundamental research, yet dominate institutional voting, and that index-based investing is a form of socialism.
“Isn’t it sad, if not damning, that institutional shareholders rely on proxy firms to tell them how they should vote? Index funds do no fundamental research, yet dominate institutional voting. Index-based investing is a form of socialism.” - Cathie Wood
Elon Musk Hits Back
Musk recently responded to critics of his new pay package, saying that Tesla is worth more than all of its competitors combined, with a market capitalization of $1.4 trillion. Meanwhile, Tesla bull and Wedbush Securities’ investor Dan Ives believes that Musk’s new pay package will be approved alongside an investment in Musk’s artificial intelligence company xAI.
Conclusion
The debate surrounding Musk’s new compensation plan continues, with Wood and Ives predicting its approval. As the shareholder meeting approaches, all eyes will be on Tesla and its shareholders to see how they will vote on this highly debated plan.