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Tesla shareholder vote: Yahoo Finance Special

On today's episode of "Asking for a Trend," host Josh Lipton dives into the controversial $56 billion pay package approved for Tesla CEO Elon Musk. While the staggering compensation plan proves shareholders' confidence in Musk's leadership, the legal battles surrounding this decision are far from over.

The show explores the implications of this unprecedented move, examining its potential impact on Tesla's stock, its shareholders, and the company's overall trajectory. As the dust settles on the shareholder vote, questions linger about the long-term consequences of this pay package.

This post was written by Angel Smith

Video transcript

Hello and welcome to a Yahoo Finance special report, Tesla shareholder meeting about to begin and we are waiting for the final results in a decisive vote over Ceo Elon Musk's pay package and a measure to move Tesla's legal domicile from Delaware to Texas on X earlier today must declaring an early victory saying he had secured support for both measures.


Now we will learn for certain joining us is Alexis K and so Alexis, what there are more measures they are gonna be considered today but those are really the two, the big two.


So and look both of these proposals just at this proposal stage, one being a repros and when a new proposal, in the case of the reincorporation to Texas, they're already facing some legal battles.

You already have a lawsuit filed last week by a Tesla shareholder saying that both of these things are invalid or should be invalid because Musk used, they say coercive tactics in order to convince his board to put this up for votes so already some problems there.

And if you look back at the last vote, what we're going to be looking for today is, well, what of course, what is the result here?

What's the outcome?

But by what margin too?

Last time in 2018, the pay vote was at 73%.

And in that case, you had 97 million disinterested shareholders saying yes, 23 million saying no.

So I'm going to be really watching for, is this a similar margin?

Is it going to get tighter here to try to figure out who's really in favor?

what is really the mandate for this pay package?

Uh Then you have of course, this reincorporation per proposal to Texas.

Now, I don't know necessarily that if Elon Musk and Tesla have to relitigate this again and go up for a third vote and re propose if it doesn't pass muster here in Delaware.

Not really sure that Texas is going to be necessarily a more friendly state for that type of litigation.

They have similar laws to Delaware, but Delawares are considered at least on the books a bit more lenient.

Do you think it would?

So you're saying is kind of an interesting question, if they made the move to Texas, would it kind of start a flood?

Is, is one question that's been proposed or?

No, this is really a Musk specific issue.

Yeah, I mean, if, if we're litigating it.


So let's just agree that there's going to be more litigation no matter which this, which way this vote goes, somebody's going to be unhappy at the end of the day.

Now as this vote goes right now, that would be under Delaware law.

But if it has to go then to a third proposal and re bake this whole thing all over and if shareholders say yes, we're going to Texas now that a nude uh dispute, let's say, or disputes, those would be under Texas law.

So, got a lot of things cooking here, sorry for all the cooking references.

Um But uh we'll be tuned in and listening for what this outcome is here, but it's not the end of the road, that's for sure.

So yes, it doesn't seem so.

And I should mention the general counsel introduced the meeting and now the board chair Robin Denholm is speaking at the meeting, so we don't have the outcomes of these votes as of yet.

We are monitoring them closely.

Thanks Alexis.

Well, Kathy Wood has been a vocal champion of Elon Musk for years.

She voted to support his pay package in today's shareholder vote and has high expectations for Tesla stock in the years to come.

Her firm A V expect shares of Tesla will hit $2600 in five years.

That would be a more than 1300% point increase from where the stock stands today.

Kathy Wood, CEO and Cio of A invest is joining us now, Kathy.

It's great to see you.

Great to see you Julie.

Happy to be here.

Thank you for inviting me.

Of course.

So you're somebody, one of the main people I wanted to talk to today about this vote because you have been very supported, uh supportive of Musk.

So you voted yesterday just briefly give us your rationale for why you think this pay package is justified and, and it should stand well.

Uh I should say from the outset, uh Elon Musk was willing to uh he was willing to commit to working 10 years uh without any uh uh salary bonus, stock compensation.

Um uh unless he achieved these goals and they were ranched, there were 12 tranches.

Um But uh he accomplished what at the time 2018, most people were saying was laughably impossible.

Number one, now we thought it was possible with brilliant execution.

Uh But most, if you, if you listen to the analysts and other auto manufacturers back then, uh they more often than not use the word, you know, possible bankruptcy.

Uh That's how much he was betting the company.

Uh and that he did and uh he accomplished something phenomenal.

And uh really at the, at the beginning, the, the value of the pay package was 2.3 billion.

The reason it got to 56 billion was the performance which was outstanding.


I'm also interested to get your take on how critical you think Musk is to Tesla because we've had analysts come on the show, uh Kathy who cover Tesla and they'll, they'll kind of suggest in their opinion.

He is almost foundational.

They'll say things like Musk is Tesla.

Tesla is Musk.

Do you agree with that, Kathy?

I think uh I think Tesla, Elon Musk has been incredibly important to Tesla and still is um not so much on the electric vehicle side that's uh on automatic pilot.

It's on the autonomous side, which is the reason we anticipate that the stock will scale to 2600 in our base case.

Um Given our research uh in the next five years.

Uh in fact, the probability of autonomous has gone up dramatically here um because of breakthroughs in A I which Elon and his team are harnessing and this is a winner, take most opportunity.

Uh the first uh autonomous taxi network to evolve and get people from point A to point B as safely and quickly as possible is probably going to win the lion's share of a given market.

Uh I think this will be country by country or maybe continent by continent.

So um and we think Tesla is in the pole position certainly here in the United States.

And we were very pleasantly surprised that China has invited Tesla to partner with Baidu on the Apollo uh autonomous Project.

I think the signaling there is uh the Chinese companies are trying to go autonomous and beat us at this game.

Uh But they have been unable to do so.

Uh And just like on the electric vehicle front, they've invited Tesla in uh to help them to help show the way.

Um I, I wanna dig more into autonomy, but first I wanna linger on the vote for a, a little bit more Kathy because what I'm curious about is, is Musk has been quite vocal of what he wants here.

He wants 25% voting control of Tesla.

Um He has said that if the pay package didn't go through, although it seems like indications are it's going to go through.

But that if it didn't go through, he was going to take some of his A I technology to one of his other um endeavors.

If the pay package indeed does get past, are you, what's your level of confidence that he won't still at some point get angry at something.

He is mercurial and take that A I technology elsewhere.

Uh Well, first of all, and just to finish off on the last uh question, uh once autonomy is in place and, and we're almost there.

Anyone who has FSD full self driving today knows that every two weeks now we're seeing leaps in performance.

And so uh uh we do think that autonomous is almost here.

And then, and then you can ask me the question uh after that happens um in terms of uh taking uh A I his A I strategy elsewhere.

Um I think what many people do not understand is uh Tesla is the largest A I project on Earth Autonomous mobility is the largest A I uh project.

We see revenue scaling in the entire ecosystem globally to 8 to $10 trillion from essentially nothing.

Now, uh uh uh in the next 5 to 10 years and the taxi platforms will get half of that again, country by country or region by region.

Um So uh we think that uh oh, I've lost the question.

Um uh Julie, I'm so sorry.

Uh It was about the, the, the package.

Oh yes.

Would he take his marbles and go somewhere else?

Well, I think what many people don't understand is um the most important variable once you've got the domain expertise and, and the A I expertise is proprietary data and Tesla has uh probably more proprietary data uh than almost any company in the world.

Uh uh Elon Musk is the CEO of this age that we believe is going to best capitalize on the convergences between and among technologies.

Uh autonomous mobility is three of the platforms, robotics, energy storage, and artificial intelligence, converging uh technologies that are going to create explosive growth.

The other companies um We don't think are going to change humanity uh as much or the environment shall we say as much as Tesla is?

And uh I think Elon is passionate about that uh topic uh The other companies are A I companies is going to harness A I and um and, and create in the case of X, the Everything app, we do think that's, that's his plan there.

But the biggest project is this one, the most challenging project is this one.

And I don't think he is going to leave until he sees autonomous on uh I guess you could say automatic pilot.

And Kathy, as you're kind of suggesting there, you know, Musk is a busy guy.

He's always been a busy guy, but he seems busier than ever.

I mean, as you're mentioning Tesla um neuralink, you know, Xaix, I mean, are you as an investor?

Um Kathy, are you ever concerned that he's spread too thin at this point?

Uh I am not because again of this convergence idea, we almost need CEO S to become multidisciplinary uh in order to understand how the world is going to work.

And uh uh Elon epitomizes that right, in, in terms of A I in each of the projects, autonomous mobility here on earth and space uh and uh A I projects elsewhere.

So this is really even neuralink.

There are, there's A I uh uh they're harnessing A I there as well.

So um I think that he is becoming a better executive from a strategic positioning point of view because of um hi, his focus on these various A I projects.

Um Kathy, I know you have a longer time horizon.

We've talked about this frequently as that's evidenced by your um your firms now analysis going out to 2029 for, for Tesla and where it should be.

Um but Tesla is down this year.

Um and your uh benchmark arc um uh arc ETF is down this year, but it's also down over the three and five year periods.

Um And so I'm just curious how you're thinking about strategy with uh with regard to Tesla and more broadly, given that, well, uh given our price target, as you say, uh Julie, uh we have a long term time horizon.

Uh The reason Tesla is down is because ev sales are much weaker in this macroeconomic environment.

And uh there's price discounting.

Uh Many people ask us about that.

We would worry more about the traditional auto manufacturers as electric vehicle prices come down below gas powered car prices.

Uh So we've got our eye on the prize.

It's a five year investment time horizon.

You are right.

Uh The three and five year numbers, uh we have not met our 15% compound annual rate of return uh over a five year period.

Uh And I think I know the reason for that in this particular case was the shock uh that we saw coming out of the fed a 24 fold uh interest rate increase uh in little more than a year which absolutely crucified long duration assets arc uh epitomizes in the equity world, long duration.

We have a five year investment time horizon whereas most have uh one I would say these days.

So um uh we understand why we think we've paid our dues in terms of uh rising rates.

If anything, the recent inflation data suggests interest rates will fall this year and the number of uh dot Plots is increasing once again, that should uh accrue to the benefit of our strategy.

Um This year.

Uh The the the backup or the underperformance has had a lot to do with going from six interest rate cuts expected at the end of last year to at 1.0 or, or just one.

Now, we're up to two.

And we think as inflation continues to surprise on the low side of expectations, which we do believe because innovation is deflationary, gasoline prices are coming down now, uh rents are coming down in many, many cities.

So we do think interest rates will follow if we were one of the worst disadvantaged or the worst hit.

Uh Among strategies, our long duration strategy, just like long bonds, long duration uh strategy there too, they were hit harder than they have been since the 17 hundreds.

Uh So very unusual experience if that's the reason we ha we got hit so hard stands to reason also that as rates come down, we should benefit.

Uh and maybe the market needs to see more from the fed in terms of rhetoric here.

Uh But we have started to outperform very recently and we think uh what we've experienced in the last, well in the last few years is the most amazing concentration of performance into just a few stocks.

Now, the mag six.

And in fact, Goldman did a study about concentration which says this is the highest concentration ever even worse than during the Great Depression.

When uh when investors were seeking companies that they knew would not go bankrupt, big cash cushions, big cash flows uh much like now, much like now.

So there is still fear in the market which has disadvantage our strategy when risk appetites uh uh pick up and investment time horizons extend a little bit as they do during bull markets.

Uh We should enjoy um AAA nice rebound.

We think last year we were up 68% beating all the major benchmarks.

Uh And that was simply because of the width of lower Infla infla.

I mean, interest rates.

Uh We think uh that, that wi will turn into a reality this year.

Um Kathy finally, as you look, have that outlook, right?

For um the fed to start cutting rates for an improvement in the portfolio um to circle it back around to Tesla, you know, Tesla is the top holding in that ETF um at about 11% or so.

Uh after the today's vote outcome, would you anticipate even adding to that stake?

Well, we cannot add to any stake.

Uh when uh a stock is at 10% or higher, we can let it run.

Uh We don't have to cut back, right.


Uh, but we, we, um, if a stock is above 10% it has outperformed other stocks because we usually gone to 10%.

It's outperformed other stocks.

And so again, we can let it run.

We just can't buy any more if, if we're at 10% or more.

Gotcha, Kathy.

Thanks a lot, Kathy.

Thank you as always for joining us.

We appreciate your time.

Thank you so much.

Thank you both.

And uh uh we're looking forward to a big bull market ahead as interest rates come down.

Thank you, Cathy.

Thank you.

Stick around more coverage of the Tesla shareholder meeting.

Still to come on.

Yahoo Finance Tesla's shareholder meeting.

Currently in progress, investors are waiting the final results on some key shareholder resolutions.

Let's get to Yahoo Finance's Prize running with the very latest prize.

What do we know?

Hey, he's, he's listening on well, uh yeah, I'm listening very intently here.

Uh They're going through a number of shareholder proposals right now right now.

They're going through AD E I uh type of proposal about uh workers and um being properly trained on harassment policies and things like that.

How there's an act, there's a shareholder, they're talking now who runs a group.

This is the usual case.

Shareholders get up, they make their case and you have activist shareholders coming on that, but the ones that come out not an agenda but saying outlines why this is a terrible idea and but they, they get the pitch there.

Why we should vote for this initiative.

So a person from n share group is talking right now.

But yeah, nothing yet.

The meat and potatoes of the shareholder vote on the pay package and also the redation of and right now we're getting to the big one that's waiting for that, waiting for the, the palate cleanser right now.

If I may.

Our Alexis Keenan is saying that as there are shareholders, speaking, there's one shareholder who says there's no promise that with the $56 billion paycheck, that Mr Musk will devote any minimum percentage of his time to Tesla or pursue any minimum amount of advanced technology.

So as you say, we are getting, you know, we're hearing these opinions from the various shareholders.

It's not an indication of how the vote is going to go, but it's an opportunity for them to speak right to air these things out.

And we had mentioned off air about how yes, there was no mention of the fact that in the proposal for Musk's pay package, for instance of, of whether they would condition him to bring those A IA I projects in house at Tesla that he wouldn't go elsewhere for them and things like that.

So I think we're, we're definitely shareholders are aware of this and they're bringing it up and the board is hearing that Robin Den Holmes there, the boards there.

So they're hearing and Musk is there too.

All right.

Well, let's get back to it.

Be checking back in as we are weighing official word on Elon Musk pay package.

What should investors from both the retail and the institutional side be looking out for right now?

Well, let's welcome in Bruce Goldfarb, Goldfarb.

Okapi partners, Ceo and President Bruce.

Good to see you.

All right.

So place your bet Bruce is he gonna get, is Elon Musk and get his payday?

He is going to get his payday.

Why do you say that?

Well, when you look at even the tweet he put out yesterday, sounding confident, sounding confident.

Uh not the kind of material that you put out the day before a shareholder meeting.

Not typically, no, not almost never would somebody put out that kind of tweet and, and in our business in the investor response and prosy solicitation business, we work with companies all the time on these annual meetings.

We work with investor groups on these annual meetings and you rarely would announce the results the day before that.

So people a meeting like this is very for most companies, Bruce, very carefully methodically choreographed.

I mean, there's a lot of time never usually put in.

There is an awful lot of time for the kind of meeting that we're watching now where there are tons of people in the room and then an audience outside of the room.

This is a show, this is a little bit of a circus.

What's unusual here is that it's not even a contest.

There's no party saying we're voting against it and asking investors to vote against it.

There are certainly investors who said we're voting against the against what Musk is asking for.

We're voting against what Tesla is requesting, but that's not an actual contest and, and they've created an environment here that is beyond the average shareholder meeting.

But do I think the result is going to be um surprising?


Um So to, and to be clear and to give our viewers a bit of background, the last time you were in here talking to us Bruce, we were talking about Disney and Tryon and you were in fact working with Tryon on its quest against Disney.

So in other words, you have a lot of experience with these kinds of proxy contests if you will, even though as you say, this one maybe isn't as much of a contest.

Um It seems as though a lot of the large shareholders are gonna vote for the pay package even though it has been somewhat contentious including in court, given your experience.

Why is that?

Well, there's a number of reasons Julie and I, what's, what's also unusual about this situation is that investors have in some instances already announced how they're gonna vote.

And before I came in here today, there were so many investors who announced how they're gonna vote.

I almost had to write it down I did write it down.

I came prepared.

I came prepared.

But what I, what I note is that active managers, people who are supportive of Elon, some of them said we're voting for him.

Uh, there are unions, pensions, hedge, uh, sorry, unions and pensions and uh church and charitable group who said we're not going to be supportive.

None of this is surprising.

People who like what Elon has done here have said they're supportive.

We talk about Peltz Peltz who doesn't have shares have said he's supportive.

And that all makes sense.

Now, the investors who haven't said anything yet, Blackrock, Vanguard State Street, they have all voted.

Uh uh and, and what's really interesting here is the retail component to this vote very similar to Disney or Starbucks campaigns that, that have occurred where we worked on those campaigns this year, the retail component is very significant to the outcome and in every one of these situations and here at Tesla, retail shareholders buy Tesla because they like what's going on.

They love what Elon Musk is doing and they're going to be wildly supportive.

The challenge always is how do you get retail shareholders to overcome their apathy and vote?

And part of our role as a proxy solicitor is to get people to vote.

And Musk has done that and Tesla has done that.

They've reached out by social media, they've reached out sent more proxy cards, phone call, mailing you name it and they're gonna come out strong.

What about Bruce's other wrinkle?

We're talking guests on the show today about this, which is, is interesting, which is Musk has effectively warned.

Listen, I'm getting what I want.

I mean, 25% control or maybe I pick up my marbles and I find another game.

My A I my, my robotics projects take them elsewhere.

How unusual is that?

What do you make of that?

It, it is unusual but it's not unprecedented.

I mean, we worked on a campaign on behalf of Starboard more than a decade ago against AOL where Tim Armstrong threatened that he was going to leave if he didn't win.

There have been a number of CEO S who said that I don't like it as a tactic.

It can be successful, but here's the reality for me with Tesla Elon Musk has 260 million shares that he's pledged as collateral for his purchase of Twitter.

He's not gonna go anywhere.

If he's gonna tank those shares, it could be, he prioritized prioritizes.

I'm not saying he leaves either but it could be Bruce.

It could be, hey, I'll put time and effort someplace else he could.

But the way his, his um enterprises are intertwined, I don't see him not putting some real priority into J Bruce.

Good to see you.

Thanks for coming in on this uh interesting day to give us your perspective on all of this.

Appreciate it.

Well, coming up our special coverage of the Tesla shareholder meeting continues as we await the final vote on Elon Musk's pay package.

Stay tuned.

The Tesla shareholder meeting is underway and one of the key proposals up for a vote is the company moving its incorporation from Delaware to Texas.

Joining us now is Charles Elson, founding director of the Weinberg Center for corporate Governance at the University of Delaware.


It's great to see you again.

Um So when we talk about this read domiciling, of course, part of it seems be an effort by Elon Musk to get away from the Chance report of Delaware which ruled against him on this pay package before we get to the actual moving to Texas.

If indeed, that's going to happen.

Tell us first, even if the shareholders approve this pay package today, what then happens in the Delaware Chancery Court or what could happen?

Not a lot because effectively the judge found in the case that uh the compensation, the equity compensation giving that much equity to someone who already had that much served no incentive with no incentive purpose.

And if that's the case, it's a gift.

And if you have a shareholder, you know, you, the companies can give uh property away if it's unrelated to corporate purpose, but everyone has to approve there has to be unanimous shareholder approval, which obviously uh you're not getting here.

And in that case, the ruling basically stands at least.

So I've argued brief.

Um and the key to this whole thing is that the reason for that, that a gift requires unanimity is the goal of Delaware Law.

It's always been investor protection, both majority investors and minority investors.

And uh the idea of a gift without purpose is something everyone should agree to.

Uh uh Now, on the other hand, it get uh if it's a, a compensation has a purpose to it, then majority rules.

But because that's a business judgment, but giving money away is unrelated to the company, corporate purpose.

And that's the key, you have to protect all shareholders.

And because if you don't, nobody invests or at least you don't get their capital.

And frankly, if you didn't need their stock or their equity or their investment, why did you ask for it first place you've got to protect them?

And that's really the bedrock of Delaware law.

This case is, is way beyond Elon Musk.

The story really is uh it, it kind of controlling shareholder, someone exerts significant control, effectively make a gift.

And the answer is yes, if everyone agrees and that's the issue here to protect minority shareholders.

And I think it's just kind of gotten lost in the uh the mystique of Elon Musk.

Uh It's not about him.

It's about a very fundamental corporate principle that I think is designed to encourage capital investment.

And that's really the bottom line here.

I've always thought or continue to say Charles let me just get your response.

Um, because we had Tesla shareholders on the show today and some of them Charles had a very, it seemed different view and, and their argument kind of went like this.

And I asked the question because I, I'm genuinely curious what your response is.

They on the show saying again, Tesla shareholders, they were saying, well, hold on.

We had a vote on this Tesla sh you know, shareholders voted on it.

They approved, it must then works under that assumption.

He hits his financial bogeys, he hits his financial targets and the judge steps in and strikes it down.

And their point was, I guess in layman terms, they just didn't feel that was fair.

That wasn't reasonable.

What is your response to that?


Well, the judge found that there was no negotiation really between Musk and the board that the board was not independent of Musk.

That, that he uh she, I think in the ruling said something effectively that he was negotiating with himself.

And the point of the board is protect the investors, protect investors is critical to any responsibility and that's their fiduciary duty there to oversee him, monitor him.

And if he doesn't work out to find someone else, but to simply give to a, a pay demand like that on demand uh without any, any sort of appropriate disclosure to the shareholders as to what happened.

So the judge found, uh that really wasn't an informed vote.

But then she went on to say, but why in the world would you give that much equity to someone who already has that much in it?

It makes no sense.

It comes out of a board that I think she thought was dominated by Mr Musk.

That's the problem here.

And you know, the, the idea is that yes, majority rules, if it's a reasoned business judgment to award something, but where something corrupted that judgment that she found and the thing in the end made no sense.

At that point, she had to protect the minority and that's really critical, that's critical to our investment strategy.

Listen, there are a lot of times you have disputes in corporate direction and, and, and some parties win, some parties don't.

But a gift is a totally different story.

And I think that that's the, uh that's the really the, the, the, the nub of what she was saying here.

And that's a very important point if she would have gone the other way that changes Della or law dramatically in ways that would really harm all shareholders.

And because you have to always have that balance between the shareholders and management and in between is the board who's responsible not to the manager, that's the independence point.

They weren't independent of things she found, but instead their obligation is to the shareholders themselves and that she found was lacking here.

And that's the whole point.

And you've got to remember.

Listen, there's an old joke in the law.

Biz good cases.

Make bad law, like you said.

Oh, he's terrific.

He's the best.

Why doesn't he get it?

But it's bad law and it ultimately will come around to bite all of us, I think.

Had she gone the other way or should she go the other way?

Which I, I hope she doesn't.

But the vote really is not that important to this case.

It's much a lot of Shaam and Biza and all kinds of funny things going on TV.

Ads flying around the world.

A lot of shareholder money is being spent to uh to convince him to give him more money.

But, you know, in the end, the point is this incredibly important point of not just Delaware law but any other state that that's what I was gonna, that's what I wanted to really ask you about as well.

Charles, you know, vi the vote is up today to red domicile Tesla in Texas from Delaware.

What then happened to the approval of the pay package because it happened when they're still domiciled in Delaware, it would then be absolutely nothing.

Absolutely nothing.

The fact there was a ruling by the judge last week that basically said that even if it's redic, she retains authority over the case and in fact, she has the authority to negate the package which she's done.

So really it now down the road, let's say they come up with a new package and they, you know, renegotiate it or not negotiate it, give it to him.

Uh, shareholders vote on it.

That's a different story.

That would be for a Texas court.

Uh But again, you're assuming that a Texas judge would view this differently.

Why in the world would you say I'm leaving Delaware where she acted to protect all shareholders to a place where I don't think they will.

That doesn't make much sense to me and listen, because someone you think is talented says I want it all.

That doesn't mean you give it all to them.

What happens if they disappear?

The threat to leave is amazing.

If you think about it, his fiduciary duty is to the Tesla shareholders.

That's why he is uh that's his obligation as CEO Yes, I'm just, I'm gonna walk that, that the company, the board should be thinking about that too.

Listen, in this country we have a president and a vice president.

Why if something happens to the president, someone comes in the Tesla goes way beyond Elon Musk.

And at some point, there isn't going to be an Elon Musk.

And what kind of company have you built if you have no great succession, iii I in place.

And that's the real issue.

That's what I think a thoughtful shareholder will step back, think about before they, you know, uh simply uh uh uh respond to it a great TV.

Ad there's more to it than that.

That's long term investing and long term capital growth.

That's the key here.

And I think people need to think about that.

Charles, thank you so much for joining the show today.

I always appreciate it.

Thank you.

Take care.

Let's welcome in Bruce Goldfarb.

Ok. Ok.

I cap, I'll get it Bruce.

I, I promise at some point, CEO and President Bruce will still win interest to get you just listen to Charles there interested to get your reaction response to some of the points he was making.

Well, Charles makes a lot of points.

But what I think is, is an interesting point is his view that sheriff holders don't care when, when uh A CEO threatens to leave or that they shouldn't care.

And, and the reality is it's a very emotional issue when and as we were discussing earlier, when we talk with investors, it can be a salient point for them.

More than that investors really do care about succession and succession at the board level.

I, I want to get into that in a moment but we have just gotten the news that the pay package has indeed been approved and the redic um to Texas from Delaware has been approved.

So I just want to report repeat that Tesla shareholders have approved Elon Musk's 2018 pay package that has been pegged at $56 billion.

It was awarded 330 million options that estimated at about $56 billion here.

You can see the shares rising and extended trading and they have approved the moving of the company, the corporate moving of the company legal moving of the company to Texas from Delaware.

I believe the company had said that they would do that as soon as it was sort of feasible to do.


So we'll see what happens here.

But again, as we have emphasized, this does not mean this is over, this does not automatically mean he is getting the money.

It could still face legal challenges.



But as as I said, I'm not surprised by the shareholder vote.

It makes a lot of sense when you analyze the shareholder composition, retail shareholders, active managers, probably many of the passive funds who hold big stakes voted in.

Let me ask you when you think through that because I totally agree with you on the retail side.

There, there always was, there's a group of folks here, they're in Tesla in part because they believe in Musk, right?

I mean, you should see my mentions on X when we talk Tesla, I mean, people, the soldiers pile in right there.

Is that enthusiasm for the big index funds.

What was the the now they may be, they're motivated differently was their motivation in part, I'm just to get your take.

I mean, it could be multifaceted in part.

Do you think they were thinking, listen, if this guy is serious and he really might prioritize other companies, other ventures or he really might take A I and robotics that places I don't wanna, I don't wanna poke that tiger.

Was that the motivation?

It's a little more than that.

Josh, when institutional investors evaluate how to vote on these kinds of situations, pay package red, do ail.

They have to think overall about what is going to improve the value of the shares that they own.

Even passive investors look through these issues.

And here for a passive investor, the company did a very good job of outlining, for example, that the laws in Texas are not going to be dissimilar from Delaware that shareholders have protection.

That's what investors care about.

They care about the governance, they care about the plan, the performance, the threat of off of any of these issues will be make it more likely for those investors to want to be supportive of of these proposals.

Bruce stick around.

We're gonna go back to our pro who's been monitoring the vote here.

I think it's interesting.

They announced that they won the vote but then they played the the please vote hype video again just to show how great everything has been.

Uh since they approved that pray package, you take a victory last year.

I guess that's what it is.

Um So uh we'll see, it looks like maybe Elon Musk is coming out and, and greeting that there he is.

He's out there.

Greeting the faithful now after he's won this vote.

Yeah, looking very excited, very pumped.

He got his pay at least for now.


We it still needs to be kind of gone through possibly the court system again.

But uh it sounds like uh the Red Dometic happened which he of course pushed for after he, after his pay package was, was denied.

Uh So now the pay vote would go through.

He, he's on the path towards getting that.

Um Tesla shares are obviously higher here.

Uh So, you know, I think we kind of saw this was gonna happen.

The question is what will the vote totals be?

They didn't, they didn't get divulge those yet.

So that'll be interesting to see how, how close it came.

I don't think it'll be so close.

The question is, will it be less than 20 eighteen's totals for his, for his pay package at least?

Uh And also I'm curious what the redation vote would be as well as you were following?

I mean, priz you were following the story so closely.

Are you surprised by what you heard today or?

No, this is how you saw it playing out.

I, I mean, iii I thought that it was gonna pass no matter what, but then we started hearing these bigger funds kind of come down and vocally say we're not going to actually approve this pay package given what we've seen and dilution effects and just the overall size of the award.

Uh And then on the other side, he saw people like Ron Baron and people like Cathy Wood talking about.

Well, it's where he's aligned with our interests.

So, um I guess that was not surprising, but I think when the vote total comes out, maybe it will be significantly less than 73%.

We'll see.

It may be over half.

I mean, obviously, obviously after over half, but uh the question is, how far above half will it be?

So that's gonna be interesting to watch.

Um Bruce, I, I wanna come back to you finally on um this sort of again to come back to the idea that Musk sort of held Tesla hostage in some respects, right?

Uh When he was talking about taking a, his A I technology elsewhere to one of his other holdings.

When he talked about that he wanted 25% voting power.

How often have you seen that in your career?

And what usually is the outcome?

It's kind of interesting.

It doesn't, as I said, it does not happen frequently.

It tends to happen within the context of a proxy fight.

If you go back to Disney, you think about the murmurs that Michael um that, that Bob Iger was going to quit, but it impacts some investors.

It's still a good tactic.

But ultimately, I believe there will be campaigns coming forward where the other side is going to say, why do we really need to rely on one person.

This is where I think Elon Musk is unusual that he brings so much more to the equation than the average CEO who is a tactician.

He's a founder, he's an innovator.

He's not just an operator.

Exactly right.

And there's nobody else around him.

Not that we've not that anyone's identified that we know.



Thanks for hanging out.

Really appreciate your insight on this pros.

Thanks as well for keeping tabs on this for us.

Uh and Tesla shareholders approving Elon Musk, $56 billion pay package moments ago, wanna get some analyst reaction as well from Craig Irwin, senior research analyst at Roth MKM.

It's good to see you, Craig.

So as you look at this as a financial analyst, how do you model an event like this and the effect that it, that it might have?

Le le let's frame this out right?

When, when Tesla, um uh when the shareholders actually originally approved this uh pay package, um in 18 Tesla was a $50 billion company today.

It's a $570 billion company.

Um Elon Musk has really been an alchemist.

Um He's uh really driven the success of the ev industry and uh you know, in many respects, he's a pioneer.

Um and he's, you know, I would say irreplaceable.

Um So I'm not surprised the shareholders uh approve the package again.

It makes sense.

The last thing they want to do is chase him away and tell him, go, go work on something else.

We don't want you with Tesla.

Everybody, everybody likes him.

I may be a big bear on the stock, but I think he's a highly charismatic guy.

Um, and, and I can really appreciate what he's done for the world.

Craig, let me ask you this.

It's hypothetical which I, I know financial analysts always love when I go there.

But I, I'm just interested if you took out your kind of crystal ball, what if the package hadn't been approved?


What do you think the reaction would have been in the stock?

Oh man, we, we could have seen drop 20 30%.

Um You know, I've always said, hey, Elon Musk is the most important person at, at Tesla.

If you put him in one of his rockets and send him to Mars, he's still the most important person at Tesla.

But you know, there would have been a reaction, I mean, the headlines would have been a big deal.

Um Yeah, he's put up his shares for Twitter uh for the Twitter purchase.

He's highly leveraged across his different companies.

Um But man, I cannot imagine him having quite the same passion um if the shareholders first approve it and then don't approve it.

Um When there's a wrinkle in the uh the overall process in uh in Delaware.

So, you know, not surprised to move into Texas.

Um You know, I can't can't imagine Delaware being very popular in Musca in, in most zip code.

But uh you know, the right thing happened today at the shareholder meeting and, you know, they're laying out their vision for the future.

I disagree on the vision a little bit.

Um I'm a bear but uh you know, he's getting what he wanted at the shareholder meeting.

Well, and Craig, you know, as you say, you're a bear the company, despite his triumph today, the company has some underlying sort of secular issues, some of which have to do with Tesla, some of which just have to do with the market more broadly does, does the board have even less oversight of Musk after the vote today?

And does that mean that he is less likely to address those issues that perhaps need addressing clearly, Musk controls the company, right?

The board does not control the company, the board is there for governance um and it's doing its best, but Musk is such a big personality.

Um and is such a um uh charismatic and um important leader, not just not just for Tesla, but I would say for the industry that it's hard to imagine the board, the board controlling him, you know, um he will control this company and uh he will determine the future of Tesla.

Um You know, now, I just, I think the board, if they were doing their job a little bit better, they would uh maybe rein in some of these very aggressive statements that are being made about, uh, autonomy and, you know, the, um, the last earnings call and he, he started to tap on this a little bit, um, before I cut over.

But the, uh, the whole idea of a sentient humanoid robot, um, on the market before the end of 2025 that conflicts with what I'm hearing from experts.


You know, uh, the person that put the first humanoid robot um on the uh space stations, actually someone that I know from uh working with him in another company, he's telling me what Tesla has a state of the art for 2014.

So extremely aggressive claims, you know, FSD rate 2.5.

But if we're gonna get to 4.0 it's gonna consume as much electricity as the drive train does today.

That's kind of a nonstarter.

So aggressive claims are not new hyperbole is not new to Elon Musk.

Um, he's got car company problems he needs to solve, you know, really demand, that's why they're starting to do advertising.

Um and then, uh he needs to take more cost out of his vehicles.

He's been a leader there in cutting cost, but that's painful for investors that really want to see earnings, you know, EPS and E A.

So it's a tough set up.

Um, you know, and the board, you know, they, they have a role, they have a very important role, but but Musk is clearly the leader of the company.

He is the leader Craig.

And one question, you know, we were kind of batting around.

I want to get your take on.

Is there anybody right now on Tesla's bench, Craig that could take over or is even being groomed to take over at some point for Musk?

Oh man, I was listening to Robin Denholm uh introduction.

She gave the first uh speech at the, the uh shareholder meeting and she was a little shaky.

Uh she was not nearly as um confident or clear.

Um And, uh, you know, it seems like, you know, when you get a, a podium like that, you know, it's, it's to raise the credibility of the board and it's to um potentially elevate the uh the executive, you know, if she is chairman of the board, you would expect her to be a natural fit, um to jump into that seat, given that she has been a, a chairman of a very large company before and, and chief executive, I should say, um of a very large company before.

Um, but she's not Musk, she's a very intelligent lady that's been successful.

Um I don't see anyone out there that, that I would, I would be excited about Tesla hiring.

I mean, Tesla's got some good people in there.

Um You know, if, if Musk groomed someone for a number of years and, uh, you know, pointed at them and said this is, this is my choice.

Um, that might be taken a little differently by shareholders but, you know, I don't think anyone wants to see him go.

Not me.

And I'm a bear.

Um, well, he's entertaining if nothing else.


But, you know, what would, what would change your bearish thesis?

Oh, gosh.

If they really do, if they really do launch, uh, optimists and it's making money, um, and it really is a sentient robot that would be, you know, it's kind of like, you know, Star Trek.

Um And then, you know, I know there's, there's things that people have been looking at like competing at the edge.

Um and you know, the higher um optical density uh cameras for vehicles.

So people say you really need 10, not four.

And if they were able to implement these different things in a package and roll it out, um for uh 4.0 excuse me, I think they really do need to use millimeter radar and, and probably LR as well for a credible package.

Um But if, if they did something like that and were able to, to show that the, um the energy tax in the drive train was not 100% and if it was 10 or 20% that would actually get me pretty excited.

Um It's, it's a great company.

They've done a tremendous job on innovation, you know, everything from their first use of silicon carbide in the drive train to, to, you know, charging to, you know, innovations on motor technology FSD, you know, 2.5 is nothing to laugh at.

I mean, that is a big accomplishment, but it's not the Robo Taxi that you get in and you type in an address and it brings it to grandma's.

So the representation versus reality is, is a little bit of a match, uh a mismatch and, and if that became a match, um I would obviously take a much more bullish view.

Craig, it was great to have you on the show today for all that insight.

Thanks for making time for us.

Thank you, Tesla's shareholder meeting is still underway.

But listen, the headline is out.

Elon Musk has won the Tesla shareholder battle to keep his record breaking pay and joining us.

Now with the takeaways thus far, we got Yahoo Finance's Alexis Keenan and Pra Suar and welcome guys, Alexis.

I'll start with you.

So, all right, the headlines out now, what, what happens next?


He kind of won the battle but not the war, right?

Because, and what do you mean by that?

Well, so legal experts say that this is not the end, there's more litigation to come no matter what the result of this vote.

Uh Elon Musk had and Tesla had an appeal on the table that presumably moot.

Now, that doesn't seem like it has any legs.

But look, you could argue this either way and say that this result, this vote itself could harm shareholders.

So we could see some action from shareholders not liking whatever effect this has on the stock.

Uh But also, uh you know, you have to look at the big question here and what's going to be litigated in the future is, did the board meet its fiduciary duties in putting this up for a reboot?

Did they have an arm's length negotiation with Elon Musk?

Did they disclose all of the necessary conflicts between Musk and the board member who recommended it?

And also did they benchmark this pay package against other CEO S?

And yes, there's the argument out there that there is no other analog for Elon Musk, that he's one of a kind that you can't really compare what he should be compensated with to other us CEO S of public companies.

Um But that is one of the things that the courts would be looking at.

Uh mostly this proposal was unchanged from the last version in 2018.

But for the fact that you had a board member, a one member, special committee for recommending this proposal on the pay side, uh who did not propose back in 2018 because she was not yet on the board during that vote.

Um And so Elon Musk is still talking at this meeting, um and he did talk about the, the possibilities for autonomy and what it's gonna do for the company.

So let's listen to what he said.

And if you just plot the points on the curve of how well autonomy is progressing and just believe the curve, um it's headed towards uh unsupervised, full self driving very quickly at an exponential pace.

So, and, and it's very clear that that will actually go to the point where it is actually far safer than a person driving a car.

So, I, I mean, obviously that's part of the longer term thesis on the company.

But the, the, the matter at hand today was the vote and he just made a very brief comment when he came on stage about that.

Yeah, I mentioned the Robo taxi fleet about how it's gonna be partially owned by Tesla and the other cars will be like your car for instance, and you can rent it out and be like an air BNB like experience, it makes money for you while you're gone.

So he's kind of hyping up some of these features.

But you know, he was talking about autonomy for, for years now and talk about how it's gonna be fully fledged by 2020 then 0.21 and then things like that.

So now we're hearing this very quickly stat.

So he's here.

You know, it seems to me like he's coming out, got the pay.

Um We're gonna justify it.

We're gonna get that road taxes out, we're gonna get that autonomy out.

It's gonna happen.

But we talk we talk, you heard, we talked to Kathy Wood and she has, um, that target 2600 now.

And when you talk to her, I mean, that was, that was a big part of the thesis.

I mean, but that has been, but to pro's point just as it's been a part of the, of what he has touted, it's, that's been a part of the thesis and it hasn't materialized and keep, I mean, Tesla has achieved a lot but rarely has it achieved what it set out to achieve on time.

Certainly it does not have a good record of timeline.

So, yes, so, so, so her thesis, she may be right?

Eventually, he may, when you talk to, when you talk to Tesla bows, it's, I'm, I'm just reading the point.

It's, it's a big part of why they're in the stock, right?

It's this bet they're, they're riding along with Musk.

And if you've been a retail investor, if you've ridden along with us, you've been, you know, even, even some of the critics we've had, have enjoyed some nice returns, which depends on when you buy.


But even who we talk to Ross Gerber this week, I mean, when we pressed him when he got it, it was just 2014.

That wasn't his issue.

I forget which analyst said this.

But at, at the moment right now you have Waymo and you have Cruz that a student actually having the cars, robotaxis being deployed by Uber and other services.

That's the next step for Tesla is, are we gonna see these sort of like geo fenced, pure Robo taxi tests happening in places like Austin or San Diego or Phoenix.

That's the next big that we see that.

Then it's kind of like, ok, this, this path is in play, but right now a lot of it is just a lot of talk robo tax is coming $2600 price target $5 trillion valuation.

We haven't seen the robo taxes yet.

We've seen a nice FSD.

Is that when it comes?

I don't know.

I mean, I'm I, we have the big event.

Oh yeah, we had to reveal the car but when are we going to see the actual trials?

I think that's the next big step that will actually prove the case.

It's actually happening.

Not to mention the sentient humanoid robots, which he also talked about today.

We'll see guys.

Thank you so much for helping with our coverage today.

Pro and Alexis.

And that wraps up our special coverage of the Tesla shareholder meeting.

Be sure to tune into young finance tomorrow morning at 9 a.m. for insight on Tesla, including a conversation with all that noted bull and that our good friend, what Bush analyst, Dan I, oh my gosh, the head shot.

It couldn't be more perfect.

Have a great night everybody.

I love that shirt.