Elon Musk says Tesla shareholders are backing his $56bn pay package; markets cling onto soft landing hopes – business live | Business

Even if Tesla shareholders approve Musk’s mega pay deal, the company must also convince an already skeptical Delaware judge to recognize it.

My colleague Nick Robbins-Early explains:

However, it is unclear whether the court that blocked the deal will accept the non-binding re-vote and allow the company to restore its pay package and relocate its headquarters.

Delaware Chancery Judge canceled Musk’s pay package in January. Chancellor Kathleen McCormick ruled that the board’s process for reaching the dollar figure, which she called “unattainable,” was illegitimate and that Musk’s ties to board members were too extensive to be considered independent.

Today is a red-letter day for Tesla, which is asking its shareholders to approve a $56bn (£44bn) compensation package for chief executive Elon Musk.

The package is again up for approval after it was rejected by a Delaware judge earlier this year — prompting the electric carmaker to also seek investor approval to move its legal base to Texas.

Tesla urged shareholders to back the package – the largest ever given to a CEO of a US-listed company – with a chair Robin Denholm attention that musk can retreat if blocked.

Despite this plea, some major shareholders oppose 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) have urged shareholders to reject the pay package.

muskhowever, announced this morning that shareholders voted to approve the package and move to Texas by “large margins.”

Unfurling the red heart emoji, he posted:

“Thanks for the support!!”

The AGM starts at 9.30pm UK time tonight. Reuters points out that shareholders are allowed to change their vote until the start of the annual meeting…

The pay package was first agreed upon by Tesla’s board and backed by shareholders in 2018. In order for Musk to qualify for the money, Tesla had to meet various revenue, profit and stock price targets that were met.

But in January, Delaware Judge Kathleen McCormick managed in favor of a Tesla shareholder who claimed the company’s board had improperly determined the pay package. The judge agreed that Musk’s pay package was not necessary to keep Musk committed to Tesla, an argument that company officials raised during the trial.

Good morning and welcome to our ongoing coverage of business, financial markets and the global economy.

Financial markets are clinging to hopes of a soft landing after the world’s most powerful central banker welcomed a drop in US inflation.

In a soft landing, central bankers tame inflation and eventually cut interest rates while avoiding recession. Sticky price pressures in the US made this scenario less likely as we advanced into 2024.

But investors were cheered by yesterday’s data, which showed US consumer price inflation eased to 3.3% in May, along with a decline in core inflation.

Chairman of the Federal Reserve Jerome Powell reinforced that optimism, telling reporters last night that it was “certainly a better inflation report than almost everyone expected.”

Powell was speaking after the Fed left US interest rates on hold at their highest level in two decades.

And his latest dot charts showed that Fed officials now expect just one 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.

But Powell also hinted that the Fed is ready to cut rates if inflation falls quickly or if the economy weakens, saying:

“If the labor market weakens unexpectedly or inflation falls faster than expected, we are ready to respond.”

That sent stocks up on Wall Street, where S&P 500 and on Nasdaq Composite closed at record highs for the third consecutive session.

Traders are encouraged that the Federal Reserve doesn’t see much of a slowdown on the horizon and are optimistic that could mean fewer rate cuts than expected this year. After all, the Fed now sees another rate cut in 2025.

So while the landing may be delayed, it may not be too bumpy.

The analysts of ING say the Fed wants to see three things: more evidence of easing inflationary pressures, more evidence of slack in the labor market, and softening consumer spending.

They add:

If we get all three of these, we believe the Fed will indeed look to move monetary policy from “tight” to “slightly less restrictive” with 25 bp rate cuts. at the September, November and December FOMC meetings.

Also due today

G7 leaders are meeting in Borgo Egnatia in the southern Puglia region, where they are expected to approve a plan to use interest from frozen Russian assets to support Ukraine

The latest US producer price index will test the soft landing narrative, with economists predicting a slowdown in price increases in May.

The agenda

• 9.30pm BST: Tesla AGM where shareholders will vote on Elon Musk’s $56bn pay deal

• 13.30 BST: US PPI PPI

• 1.30pm BST: Initial weekly US jobless claims

• 14:00 BST: Russia’s trade balance for April