Delaware Judge Invalidates Elon Musk’s $56 Billion Tesla Pay Package Amid Shareholder Lawsuit

Delaware Judge Invalidates Elon Musk’s $56 Billion Tesla Pay Package Amid Shareholder Lawsuit

Delaware Judge Invalidates Elon Musk’s $56 Billion Tesla Pay Package Amid Shareholder Lawsuit

A Delaware judge has invalidated Elon Musk’s $56 billion pay package as Tesla’s CEO, following a lawsuit by investor Richard Tornetta who deemed the deal unfair. Tornetta, supported by major pension fund CalSTRS and proxy advisory firms, argued that shareholders weren’t adequately informed about the ease of achieving the operational and financial goals tied to Musk’s compensation.

In 2018, Musk’s pay package granted him stock grants tied to 12 tranches of escalating goals. Despite Tesla meeting the financial targets, Tornetta contended that such compensation was unnecessary, given Musk’s substantial existing stake in the company.

Tesla’s defense emphasized the package’s necessity to align Musk’s incentives with shareholders and maintain his focus during the Model 3 production ramp-up. Musk, who owns about 22% of Tesla’s stock, stands to appeal the decision.

While the judge finalizes the ruling, discussions on a new pay package with the board remain on hold. Musk, regardless of the contested pay, has benefited from Tesla’s stock surge, boosting the value of his stake by over $100 billion since 2018.

Dow Achieves Consecutive Record Highs Driven by Tech Earnings and Strong Labor Market; Fed Meeting Commences

The Dow achieved a consecutive record high closure on Tuesday, driven by robust quarterly earnings in the technology sector and positive labor market indicators. As the Federal Reserve commenced its two-day meeting, the Dow Jones Industrial Average saw a 0.4% increase, gaining 133 points by 14:49 ET (19:49 GMT). Meanwhile, the S&P 500 experienced a marginal 0.1% dip, and the Nasdaq Composite dropped by 0.8%.

The U.S. Labor Department’s latest Job Openings and Labor Turnover Survey highlighted the continued strength of the labor market, with job openings in December surpassing economists’ expectations at 9.03 million, compared to the projected 8.75 million. This positive employment data coincided with a surge in consumer confidence to a two-year high.

The dual reports indicating economic vigor contributed to a rise in 2-year Treasury yields, as investors anticipated the Federal Reserve maintaining its prolonged period of elevated interest rates. While the Fed is anticipated to keep rates steady, market analysts, such as Stifel, predict that accompanying commentary will emphasize the importance of continued patience and a balanced risk assessment.

Major tech companies, including Microsoft, Alphabet, and AMD, initiated the earnings season with results surpassing expectations. These reports preceded anticipated earnings announcements from Amazon, Apple, and Meta later in the week. The combined market capitalization of Alphabet, Microsoft, Apple, Amazon, and Meta played a significant role in the S&P 500’s impressive 24% gain in 2023.

In other notable market movements, Super Micro Computer experienced a more than 3% increase after reporting second-quarter results that exceeded Wall Street estimates, fueled by heightened demand driven by artificial intelligence.

General Motors demonstrated a nearly 7% stock increase following a positive outlook for 2024 and indications of potential capital returns to shareholders. Despite a challenging backdrop, analysts at Wedbush noted that GM’s profit margins and growth targets remained on track.

Conversely, United Parcel Service (UPS) faced an 8% stock decline as the company projected annual revenue below expectations, citing sluggish domestic and international e-commerce demand. UPS also unveiled plans to cut 12,000 jobs to manage costs.

Pfizer closed more than 1% lower despite reporting an unexpected quarterly profit. However, weaker-than-expected sales of key products, including the cancer drug Ibrance, tempered investor sentiment.

Raymond James Downgrades AMD to Outperform, Citing Elevated AI Revenue Expectations; Adjusts Price Target to $195

Raymond James downgraded AMD (NASDAQ:AMD) from Strong Buy to Outperform on Tuesday, concurrently adjusting the stock’s price target to $195 from $190 per share. Analysts cited heightened expectations for AI (artificial intelligence) revenue as the primary reason for the rating revision.

The analysts emphasized the early stages of the MI300 ramps and anticipated a compression in multiples as revenue accelerates. They projected AMD’s base business to generate $3.5-4 in earnings per share (EPS) by 2025, necessitating AI GPUs to contribute over $3 EPS, equivalent to $12 billion in revenue or 800,000 units.

In comparison, the analysts highlighted that NVIDIA (NVDA) shipped an estimated 2 million units in CY23, with a projection of 3.2 million units for CY25. While acknowledging the possibility of a ~20% unit share, they expressed reservations, considering AMD’s current <15% unit share in Gaming GPUs and approximately 25% share in Server CPUs.

Raymond James’ overall analysis suggested that the stock already reflects an approximate 20% unit share for AI GPUs, aligning closely with their bullish scenario.

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