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Elon Musk wins Tesla shareholders’ battle to keep his record salary

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Elon Musk wins Tesla shareholders' battle to keep his record salary

Tesla (TSLA) shareholders re-approved Elon Musk’s record pay pact and signed a new Texas incorporation in a show of support for the CEO as he fights legal battles on multiple fronts.

“Damn, I love you guys,” Musk said after the votes were tabulated while speaking at the company’s annual shareholder meeting in Austin, Texas.

Tesla said 72% of shareholder votes, excluding Musk and his brother Kimbal, were in favor of a US$56 billion compensation package that was granted in 2018 and after overturned this year by a Delaware judge. That payment plan is now valued at about $48 billion.

The wage pact received 73% support when it was first granted six years ago.

The vote count was 84% ​​for reincorporation in Texas rather than Delaware – a move taken in reaction to January’s ruling against Musk’s payout. This total also excluded shares held by Musk and his brother.

Musk said Friday on X, the social media platform formerly known as Twitter that he owns, that he would send a cake to Delaware with the Latin phrase “Vox Populi, Vox Dei” as a “parting gift.”

Tesla shares were little changed in premarket trading on Friday and fell 1% in early trading. It rose 3% during market hours Thursday after Musk predicted that final outcome, saying both proposals were “passing by wide margins.”

Musk became the latest of many bosses this year who have successfully defeated attempts to reduce their pay.

Only two of the 340 companies that held such shareholder votes as of June 6 had their executive compensation packages rejected, according to ISS-Corporate. This 0.6% failure rate is lower than any full year since 2020.

But Thursday’s results may not mean the end of the corporate governance drama at Tesla.

On the one hand, shareholders dissatisfied with the result will be able to challenge its legality before the same Delaware court that annulled Musk’s payment earlier this year.

A shareholder already filed a lawsuit last week in that state challenging Tesla’s wage and redomestication proposals, alleging that Musk used “forceful and coercive tactics” in his efforts to persuade shareholders to ratify the proposals.

“Tesla is likely to end up back in Delaware courts defending the package against lawsuits,” Jerry Comíziobusiness law professor at American University’s Washington College of Law, told Yahoo Finance.

The story continues

Comizio said shareholders can argue that the process that led to Thursday’s vote suffered from the same type of disclosure, corporate governance and fiduciary duty deficiencies that led the Delaware judge to invalidate the 2018 vote.

Elon Musk arrives at the 10th Breakthrough Awards Ceremony on Saturday, April 13, 2024, at the Academy Museum of Motion Pictures in Los Angeles.  (Photo by Jordan Strauss/Invision/AP)

Elon Musk arrives at an awards ceremony in April at the Academy Museum of Motion Pictures in Los Angeles. (Photo by Jordan Strauss/Invision/AP) (Jordan Strauss/Invision/AP)

Delaware Judge Kathaleen McCormick ruled that Tesla’s board did not act “in Tesla’s best interests” shareholders in approving the US$56 billion deal.

The central thrust of the McCormick decision, according to the corporate law professor at Case Western Reserve University School of Law Anat Alon Beckwas that Tesla’s board failed to follow proper procedures and disclosures or address various conflicts of interest with Musk.

“They always had the opportunity to do this, but they chose not to,” Alon-Beck said. “Instead, they materially failed to meet the shareholder disclosure obligations that have been the central tenants of Delaware law for decades.”

But corporate governance and compensation lawyer Bob Lamm said it’s possible the company disclosed enough this time to protect itself from additional litigation.

“You can’t disclose everything,” Lamm said. “At some point, the court is going to have to say, ‘Tesla, you did your job.’”

O ongoing drama surrounding the vote intensified in recent weeks when Tesla President Robyn Denholm and Musk defended with strength for a newly submitted pay package that was similar to the original 2018 award invalidated by the judge.

Publicly, Denholm presented an open letter asking for shareholder approval of Musk’s compensation package.

“Fairness and respect demand that we honor the collective commitment we made to Elon – a commitment that was, and fundamentally still is, about retaining Elon’s attention and motivating him to focus on achieving amazing growth for our company. “ Denholm wrote in your letter.

Denholm’s choice of words – “retain Elon’s attention and motivate him” – raised eyebrows, as most independent board chairs generally do not write open letters asking for shareholder approval of management compensation packages, much less claiming that compensation is necessary to keep the CEO motivated.

Even before the 2018 pay package was invalidated by the Delaware court, Musk threatened shareholders about their divided attention given that he is in charge of or spends a significant amount of time at SpaceX, X.com (formerly Twitter) and Boring Co., among other ventures.

“I’m not comfortable making Tesla a leader in AI and robotics without having 25% voting control. Enough to be influential, but not so much that it can’t be overturned.” Musk said on his X account in January. “Unless that’s the case, I would prefer to build products outside of Tesla.”

Robyn Denholm, Chair of the Technology Council of Australia and Chair of the Board of Directors of Tesla Inc, during a speech to the National Press Club of Australia in Canberra on Wednesday, September 14, 2022. (Photo by Alex Ellinghausen/Sydney Morning Herald via Getty Images)Robyn Denholm, Chair of the Technology Council of Australia and Chair of the Board of Directors of Tesla Inc, during a speech to the National Press Club of Australia in Canberra on Wednesday, September 14, 2022. (Photo by Alex Ellinghausen/Sydney Morning Herald via Getty Images)

Tesla Chairman Robyn Denholm. (Photo by Alex Ellinghausen/Sydney Morning Herald via Getty Images) (Fairfax Media via Getty Images)

Case in point: Tesla recently had to deal with reports that Musk ordered Nvidia (NVDA) AI chips aimed at Tesla be diverted for X.com. Musk defended the movement after the report was released, claiming that Tesla did not have space to use the chips and otherwise they would have sat in a warehouse.

In the days leading up to the vote, there were even more legal distractions for Musk and Tesla.

On Tuesday night, the Employees’ Retirement System of Rhode Island (ERSRI) filed another lawsuit in Delaware accusing Musk and his brother Kimbal Musk. of selling a total of US$30 billion in shares using inside information – both of whom knew that the proceeds would be used to finance Elon’s purchase of Twitter (now X) and that two brothers were also aware that Tesla’s vehicle deliveries had fallen short of projections.

The Wall Street Journal also published a story on Tuesday night alleging that Musk had several inappropriate relationships with employees at SpaceX, the rocket and spacecraft company that Musk founded and where he still serves as CEO.

Then, separately, on Wednesday, eight former SpaceX employees filed a lawsuit against Musk for sexual harassment and retaliation in California state court, alleging that Musk created a “hostile and undesirable work environment” based on his behavior, among other allegations.

Apparently, Musk was involved in some efforts to bring large shareholders to Tesla’s side.

He supposedly participated in recent meetings with proxy consultant Glass Lewis and money management giants Vanguard Group, State Street (STT) and BlackRock (BLACK), all of them among Tesla’s top five institutional holders.

Glass Lewis and another proxy advisor, ISS, recommended that shareholders vote against the compensation.

But Tesla’s lobbying campaign has apparently been successful with at least some of these gargantuan investors. The New York Times reported Thursday that both BlackRock and Vanguard voted in favor of the pay package.

This time, Tesla shareholders had a little more information than they did before the vote on Musk’s salary six years ago.

At that time in 2018, no one knew that Musk would meet all of the deal’s revenue and operational milestones that unlocked his right to buy Tesla options for $70.

If Musk had not been able to meet growing revenue and market capitalization requirements, his CEO compensation based on stock options would have been zero.

He said on Thursday, in response to a question asked at the shareholder meeting, that he should own Tesla shares for five years.

“It’s not really money and I can’t run away, nor do I want to,” he said.

There were some smaller shareholder groups this went against Musk’s pay package, as well as a big one: Norway’s $1.7 trillion sovereign wealth fund.

“We remain concerned about the total size of the award, the structure given to performance triggers, dilution and the lack of key person risk mitigation,” Norges Bank Investment Management (NBIM) said. the fund operator said.

The fund, which also opposed Musk’s pay package in 2018, holds a $5.6 billion stake, comprising 31.57 million shares, or 0.99% of all shares outstanding, making it Tesla’s seventh-largest shareholder, per Capital IQ.

And the California State Teachers’ Retirement System (CalSTRS) also said he would vote against Musk’s pay package, with the pension fund’s chief investment officer telling CNBC the stock awards were “ridiculous.” CalSTRS owns about 4.7 million Tesla shares.

But some Musk supporters doubled down on the argument that his presence is necessary for Tesla’s future.

Long-time Tesla shareholder Baillie Gifford said he would vote for of Musk’s package, according to Bloomberg sources, with the argument that the package was in line with shareholder returns.

“Elon is the ultimate ‘key man’ of key man risk,” billionaire Tesla investor Ron Baron wrote last week in an open letter defending the approval of the salary package. “Without his tireless drive and uncompromising standards, there would be no Tesla.”

Some small shareholders took to social media to drum up votes and support for Musk. Someone posting on X as @TeslaBoomerMama said Thursday, before the final vote was announced, that “your votes will help remedy a true injustice.”

“Don’t mess with Tesla’s retail shareholders.”

Correction: An earlier version of this article misspelled attorney Bob Lamm’s name. We regret the error.

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Breakfast on Wall Street: The Week Ahead

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Wall Street Breakfast profile picture

The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).

The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.

In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.

Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.

Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.

Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.

Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.

Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.

IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.

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Trump shooting: Gold could hit record high, dollar and cryptocurrencies set to jump

FinCrypto Staff

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Police cars outside the residence of Thomas Matthew Crooks, the alleged shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. In the aftermath of the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being killed by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.

“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”

Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.

An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.

Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.

Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.

Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.

“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.

Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.

But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.

Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.

“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”

Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.

“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”

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Latest Business News Live Updates Today, July 11, 2024

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Latest Business News Live Updates Today, July 11, 2024

Follow us for stories on Bill Gates, Elon Musk, Mukesh Ambani, Gautam Adani as we bring you everything that’s happening in the business world. Follow the latest gold and silver prices here too. Stay in the know on all things business with us.

Latest news on July 11, 2024: Airtel says its new Xstream Fiber plans bundle over 350 live TV channels (Official Photo) (Reuters) Disclaimer: This is an AI-generated live blog and has not been edited by Hindustan Times staff.

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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

FinCrypto Staff

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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.

Jio Financial Services News

Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”

“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.

Jio Financial Stock Target Price

Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”

On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.

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