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The package is up for approval, again, after being thrown out by a Delaware judge earlier this year – which has prompted the electric car manufacturer to also seek investor approval to shift its legal base to Texas.
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Tesla has been urging shareholders to back the package – the largest ever granted to an executive at a US-listed company – with chair Robyn Denholm warning that Musk could step back if it was blocked.
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Despite that plea, some major shareholders are opposing the package, including Norges Bank Investment Management, and the California State Teachers’ Retirement System (CalSTRS). And major proxy firms Glass Lewis and Institutional Shareholder Services (ISS) had urged shareholders to reject the pay package.
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Musk, though, has declared this morning that shareholders are voting to approve the package, and the move to Texas, by “wide margins”.
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Rolling out the red heart emoji, he posted:
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“Thanks for your support!!”
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Both Tesla shareholder resolutions are currently passing by wide margins!
♥️♥️ Thanks for your support!! ♥️♥️ pic.twitter.com/udf56VGQdo
— Elon Musk (@elonmusk) June 13, 2024
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The AGM starts at 9.30pm UK time tonight. Reuters points out that shareholders are allowed to change their vote up to the start of the annual meeting….
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The pay package was first agreed by Tesla’s board, and backed by shareholders, in 2018. For Musk to qualify for the money, Tesla had to hit various revenue, profit and share price targets, which were met.
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But back in January, Delaware judge Kathaleen McCormick ruled in favor of a Tesla shareholder who argued that the company’s board inappropriately set the pay package. The judge agreed Musk’s pay package was unnecessary in keeping Musk dedicated to Tesla, an argument that company officers made during the trial.
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Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
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Financial markets are clinging onto hopes of a soft landing after the world’s most powerful central banker hailed a fall in US inflation.
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Under a soft landing, central bankers tame inflation and eventually cut interest rates while avoiding a recession. Sticky price pressures in the US have made this scenario seem less likely, as we’ve moved through 2024.
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But investors are cheered by yesterday’s data showing that US consumer price inflation weakened to 3.3% in May, along with a fall in underlying inflation.
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Federal Reserve chair Jerome Powell bolstered that optimism, telling reporters last night that it was “certainly a better inflation report than almost anybody expected.”
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Powell was speaking after the Fed left US interest rates on hold, at a two-decade high.
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And its latest dot plots showed that Fed officials now expect just one interest rate cut this year, down from three forecast in March. They also expect inflation to be more stubborn this year than they thought in the spring.
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Fed’s Dot Plot:
Projection for just one US rate cut this year despite a very tame CPI reading.
However, the Fed Chair said that many officials were on the fence over a second rate cut, and had just tacked an extra one onto 2025. pic.twitter.com/TTqz6MX5BN
— PowerPoint Guy (@Adi_183) June 13, 2024
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But Powell also hinted that the Fed is ready to cut rates if inflation falls quickly, or if the economy weakened, saying:
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“If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond.”
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This lifted stocks on Wall Street, where the S&P 500 and the Nasdaq Composite closed at record highs for a third straight session.
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Traders are encouraged that the Fed doesn’t see a big slowdown on the horizon, and sanguine that this may mean fewer rate cuts than hoped this year. After all, the Fed now sees an extra rate cut in 2025.
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So while the landing may be delayed, it may not be too bumpy.
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Analysts at ING say the Fed wants to see three things: More evidence of inflation pressures easing, more evidence of labour market slack, and softening consumer spending.
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They add:
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If we get all three of these, we believe the Fed will indeed seek to move monetary policy from “restrictive” to “slightly less restrictive” with 25bp rate cuts at the September, November and December FOMC meetings.
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Also coming up today
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Leaders from the G7 are meeting in Borgo Egnazia in the southern region of Puglia, where they’re expected to approve a plan to use the interest from frozen Russian assets to support Ukraine
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The latest index of US producer prices will test the soft landing narrative, with economists predicting a slowdown in price rises in May.
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The agenda
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9.30pm BST: Tesla AGM, where shareholders will vote on Elon Musk’s$56bn pay deal
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1.30pm BST: PPI index of US producer prices
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1.30pm BST: US weekly initial jobless claims
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2pm BST: Russia’s trade balance for April
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Important Events
Musk says Tesla shareholders voted for $56 billion compensation package
It’s a landmark day for Tesla as the company asks shareholders to approve a $56bn (£44bn) pay package for CEO Elon Musk.
The bill is back up for approval after being rejected by a Delaware judge earlier this year, so the electric-vehicle maker is also seeking investor approval to move its legal base to Texas.
Tesla is asking shareholders to back the largest package ever given to an executive of a publicly traded U.S. company, with its chairman Robin Denholm caveat mask If you are blocked, you can retreat.
Despite these pleas, some major shareholders, including Norges Bank Investment Management and the California State Teachers Retirement System (CalSTRS), are opposed to the compensation package, and major shareholder representation firms Glass Lewis and Institutional Shareholder Services (ISS) have urged shareholders to reject the package.
maskBut the company announced this morning that shareholders had voted by a “vast margin” to approve the package and the relocation to Texas.
He posted a red heart emoji:
“Thank you for your cooperation!!”
Both of Tesla’s shareholder resolutions have now passed by wide margins.
♥️♥️Thank you for your support!! ♥️♥️ pic.twitter.com/udf56VGQdo
— Elon Musk (@elonmusk) June 13, 2024
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The AGM will begin at 9.30pm UK time tonight. Reuters points out Shareholders may change their vote up until the start of the Annual Meeting….
The compensation package was first approved by Tesla’s board of directors and supported by shareholders in 2018. To be eligible for the pay, Tesla had to hit various revenue, profit and stock price targets, which it has met.
But in January, Delaware Judge Kathleen McCormick ruled in favor of shareholders who had argued that Tesla’s board had improperly set his compensation package. The judge agreed that Musk’s compensation package was not necessary to keep him committed to Tesla, as Tesla executives had argued during the trial.
Introduction: Hopes for a soft landing remain strong after Fed meeting
Good morning and welcome to our continuing coverage of business, financial markets and the global economy.
Financial markets are clinging to hopes of a soft landing after the world’s most influential central bank governor praised falling U.S. inflation.
In a soft landing, central banks would cut interest rates while keeping inflation in check and ultimately avoiding a recession. As 2024 progresses, this scenario appears unlikely, with price pressures in the U.S. remaining robust.
However, investors were pleased to see data released yesterday showing that US consumer price inflation fell to 3.3% in May, with underlying inflation also declining.
Chairman of the Federal Reserve System Jerome Powell The governor added to his optimism by telling reporters last night that “this is certainly a better inflation report than almost anyone was expecting.”
Powell His comments came after the Fed left U.S. interest rates unchanged at their highest level in 20 years.
The latest dot plot also shows that Fed officials now expect just one rate cut this year, down from three they predicted in March, and they also expect inflation to be stronger this year than they thought in the spring.
Fed dot plot:
Despite very modest Consumer Price Index (CPI) data, only one interest rate cut in the US is forecast this year.
But the Fed chairman said many officials had not yet made a decision about a second rate cut, instead just deciding to cut rates one more time in 2025. pic.twitter.com/TTqz6MX5BN
— Powerpoint Guy (@Adi_183) June 13, 2024
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Fed dot plot:
Despite very modest Consumer Price Index (CPI) data, only one interest rate cut in the US is forecast this year.
But the Fed chairman said many officials had not yet made a decision about a second rate cut, instead just deciding to cut rates one more time in 2025. pic.twitter.com/TTqz6MX5BN
— Powerpoint Guy (@Adi_183) June 13, 2024
but Powell He also suggested the Fed would be prepared to cut interest rates if inflation fell too quickly or the economy weakened, saying:
“We are prepared to respond if the labor market weakens unexpectedly or if inflation falls more quickly than expected.”
This caused stock prices on Wall Street to rise S&P 500 And that Nasdaq composite It closed at an all-time high for the third consecutive trading day.
Traders are encouraged that the Fed doesn’t see a big economic slowdown in the near future and are optimistic that interest rate cuts this year may be fewer than expected — after all, the Fed is currently projecting additional cuts in 2025.
So the landing may be delayed, but the turbulence may not be as severe.
Analyst ING The Fed wants to see three things: more evidence of easing inflationary pressures, more evidence of labor market spare capacity, and softening consumer spending.
They added:
If all three of these things happen, we believe the Fed will seek to move monetary policy from a “tight” to a “somewhat loose” direction by implementing 25 basis point rate cuts at its September, November, and December FOMC meetings.
Also appearing today
G7 leaders are meeting in Borgo Egnazia in the southern region of Puglia and are expected to approve a plan to use interest from frozen Russian assets to help Ukraine.
The latest U.S. producer price data will test the soft landing theory, with economists predicting price growth will slow in May.
agenda
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9.30pm BST: At Tesla’s annual general meeting, shareholders will vote on Elon Musk’s $56bn compensation deal.
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1.30pm BST: US Producer Price Index (PPI)
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1:30 p.m.: U.S. weekly initial jobless claims
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2pm BST: Russia’s April trade balance
