Hey, this is David Popotoppolis, and boy do we have a fun bonus for you today. There's a new podcast in our Bloomberg family called money Stuff. The podcast hosted by our friends Matt Levine and Katie Greifeld. Every week, they talk about Wall Street, finance, and all the other stuff that Matt covers in his wildly popular newsletter money Stuff.
Maybe you've heard of it. Of course, you can't talk about money stuff without talking about a one mister Elon Musk, and in their most recent episode, Matt and Katie discussed Elon in the upcoming shareholder vote on his pay package. We thought you might get a kick out of their conversation, so we're sharing an excerpt with you here. If you want to listen to the whole episode, we'll leave a link in the show notes, or you can find it by searching money Stuff the podcast wherever you listen to
your podcasts. The elon In crew will be back in your feed tomorrow with a brand new episode.
Hello and welcome to the money Stuff podcast, your weekly podcast where we talk about stuff related to money. Hi'm Matt Levie. I've read the Money Stuff colin for Bloomberg Opinion.
And I'm Katie Greifeld.
I'm a reporter for Bloomberg News and an anchor for Bloomberg Television.
It's the best day of our lives.
It is the best day of our lives, which happens every day on Fridays.
We have a lot to talk about today. We have to talk about Elon Musk.
Of course, we had a whole week with that Elon Musk.
I think, I know it was weird that we didn't get to it in the first week. So we'll talk about Elon Musk in that pay package fifty six billion dollars, and of course his issues with Delaware. We're also going to talk about Jane Street versus Millennium. You just published on this.
By the time you heard this podcast, I will have published on it roughly twenty four hours ago, recording it shortly after I published on it.
It's Thursday right now, and Matt published twenty minutes ago. So this is the one I'm least prepared for, as we're also going to talk about Hunter Brook, the hedge Fund. That's also a newspaper question Mark. Indeed, before we get into this week's topics, it's our second episode.
It's our second episode. We got a lot of feedback On the first episode, we got a.
Lot of feedback.
A lot of it was about all of it comment that I made about.
The doped Olympics.
Surprise, they already exist and they're funded by Peter Thiel.
Well, it don't exist. They're like launching.
Yeah, the idea is out there, the enhanced Games that would have no drug testing. So if you didn't want to do it performance enhancing drugs, you could still enter.
You would just lose, yes, or you could do the regular Olympics, which you'll still have drug testing.
Yeah, and you'll probably still lose.
I wonder if, like presumably day one, the best athletes will still do the regular Olympics.
Yeah.
I wonder how long it'll take for the Enhanced Olympics to have faster times and it jumps.
It's a great question because if you're.
Like the tenth best track athlete and you do a lot of drugs better than the.
Best, probably there's only one way to find out.
So is going to do it?
These games need to happen.
The event roster includes individual sports such as athletics meaning track and field, aquatics, gymnastics, strength and combat. I would watch these.
But what we don't have on that list.
Is drissage.
Trissage Yeah, for the uninitiated, dressage is horse dancing effectively, just go on YouTube look it up. It's a ridiculous sport that, for better or worse, I've partake in. I'm not sure if when I enter the enhanced games, which I will, whether I take the drugs, the horse takes the drugs. Do we both take the drugs the drugs?
Have you or your horse ever been like offered drugs? Has ever been like a controversy at your dressage?
We're not that good maybe in higher levels of the sport, but what we're doing, it's very loosely dressage.
Let's talk about the time, moving gracefully along. Elon Musk.
The big news this week is that Tesla came out with their proxy statement. Two items of interest. They're going to have shareholders to vote again on that twenty eighteen pay package of fifty six billion dollars that was voided by a Delaware judge, and related to that, they're going to vote on whether to move Tesla's state of incorporation from Delaware to Texas.
What do you want to start with?
They're interrelated, Yes, right, he got paid a giant snack of options in about twenty eighteen. Everyone says they're worth fifty six billion dollars. Whatever they're worth, like forty billion dollars, fifty billion dollars, just like a conventional number that people attached to it because you know, go up and down with the stock. But right now they're with forty billion dollars and judge took them away in January. I said that was too much to pay him and it wasn't
properly approved by the shareholders. And so they're going back to the shareholders to one get it properly approved and two never has to deal with the Delaware judge again because they're going to move to Texas.
Like you said, these are two intimately related issues. But sticking with the pay package, which everyone is saying is fifty six billion dollars, maybe it's forty billion dollars, but the vote is in June. Yeah, are they going to approve it again these shareholders?
I think so. The proxy quits a lot of letters from individual shareholders saying how much they love Elon Musk and how they're going to approve it. And also, by the way, letters from like trope price right big shareholders too. It's interesting if you were a S. Sherelder in like twenty twenty one, or even like December of last year, I think you would say this pay package was worth it.
In twenty eighteen, they said we're going to pay youl On Musk fifty six billion dollars if he takes the market cap of Tesla from like sixty billion dollars, like six hundred and fifty billion dollars, And at the time that seemed like a real stretch goal. And then he did it really quickly, and so all the shareholders got rich, like they made a lot of money on Tesla, and I think they felt a real sense of gratitude, and so I think very few shoholders were complaining about his
pay package, but one did ensued. Right, Yes, I think the shareholders were happy with it. But now if you go back to them and say you want to reprove it again, they could be like, we already got whatever he did. He did the stuff that made it a six hundred and fifty billion dollar company, So if we can get those passed efforts for free, why shouldn't they get it for free. They feel grateful, but did they
feel fifty six billion dollars grateful? But that' said if you're a Tesla scherolder at this point, you're playing a longer game, and rightly or wrongly, I think Tesla sherolders assume that Elon Musk and his continued affection are essential to the value of Tesla stock. And so if they vote down this paypackage, like, will he quit in a huff? Maybe he's got a lot going on, right, He's got a lot of distractions, so he could quit in a huff.
And although his mercurial stewardship has not been great for the stock price in the last couple of years, he quits in a huff, that's going to take the stock.
Think, Yeah, I mean the stock's already down forty percent year to day.
Yeah, Like it's been a rough ride. But still I think they want him there. It's not like if they vote this dan, he'll come back and be like, Okay, fine, can you be like two billion dollars? Like I think, like, if they vote this down, he's going to be really mad, really mad.
I guess I have two kind of related points to that, to what you're saying, what is the key man risk to Tesla, Like how much does Tesla need Elon Musk at this point is something I think about all the time. This is an established company at this point.
No, I agree with that it's an established company. They could probably operate on its own. It's not like the stock has been continuing to go out from strength to strength. It's been a rough time. I do think that there's probably still a valuation premium for Elon Musk, And I think like it's a somewhat retail have you stocked the a lot of people who like Elon Musk and the stock, And I think if he were to leave, that would
be bad. But I'm not sure of that in the way that I might have been in like twenty twenty one.
Yeah.
I also think, by the way, whatever your sort of economic calculation, I do think that some of the sheolders at least are like, we agreed to pay him to these options. We voted on it a court in a weird technical opinion strike that down, and we don't think that's fair. We think it's like bad for corporate democracy and also bad for like fairness to Elon Musk, And so we're going to give him that fifty six billion
dollars back anyway. I think there's probably some of that going on among some of the shell including some of the institutional shoolders.
Even if this is approved, we'll just get avoided again. Like how does this work if they approve it again.
It's a fascinating question, I think, and Tesla thinks the answer is that if they approve it again, this time it will stick, right, because what happened last time is they approved it and the judge found that the shaholders were not fully informed of all the conflicts of interest
involved in setting his pay package. Now they're fully informed, in part because, like Tesla went back and gave disclosures, but also they just detached the judge's opinion to the proxy statement to be like anything that the judge found bad here, you can read it right. So I think they have to be fully informed. There's no problem with the vote, but the law and this is not super clear, and they say in the proxy statement, we're not totally
sure what the effect of this will be. I think there's some argument that the disgruntled shaholder can sue again and the judge again gets to decide if the pay package is fair, and we kind of know she thinks it isn't so it might get struckt. But the other thing I want to say is that I don't know what the disgruntled cherold. There's a guy named Richard turnouta. I don't know what he thinks. I don't know if
he wants to do this again. But you know who cares his lawyers who when they won in the Delaware court and they strike down this fifty six billion dollar pay package. They went to the court and they said, we want five point six billion dollars worth of Tesla stock as a fee for this win. Right, And their theory is, we saved shareholders all this money by clawing
back the fifty six billion dollars from Elon Musk. If the shareholders give you On Musk the fifty six billion dollars back, they haven't gotten the fee yet, right, it's still in court. Yeah, if they give the money back, what is their argument that they save the shareholders any money? Like, Yeah, They've got a lot of money riding on the argument that Musk's compensation actually got clawed back, so they care.
Yeah, let's talk about the second part of what happened Texas. Are they going to run into this problem again in Texas moving to Texas.
What does that do for Tesla?
They say that moving to Texas makes sense because they're big factories in Texas, their headquarters in Texas. Elon lives in Texas, and so they have to meet their incorporation to Texas because that just makes sense. No other company thinks that, right, Like, that's not really a thing, Like every company is incorporated in Delaware and very few are located in Delaware. But it's what they say. The answer is,
nobody knows. There's a lot of Delaware corporate law and there's not a lot of corporate law anywhere else because most big companies that have big lawsuits are incorporated in Delaware, and so that's where all the cases are, Tesla says, And it's proxy that they think the law in Texas is mostly the same as the law in Delaware. I
think it's probably true. But everyone kind of assumes that if this had all happened in Texas, and if a shareholder had sued Elon Musk in Texas to get back the fifty six billion dollars, a Texas judge would have been like, nah, Elon Musk can keep that money. There's no basis for assuming that nobody knows. It seems that way, and clearly Elon Musk assumes it because as soon as the Delaware opinion came out, he's like, we're moving to Texas. By the way, that happened, the opinion came out and
he was like, we're moving to Texas right away. He was saying it on Twitter. But Tesla now and it's proxy statement has to explain why it's moving to Texas, and it describes this very thorough process that did to evaluate moving to Texas. So it formed a special committee of independent directors. There's one person on the committee, was this name Elon Musk. No, no, it's a truly independent director.
Her name is Kathleen Wilson Thompson. The special committee met sixteen times for more than twenty six hours, says the Proxy, which is like a fun thing to imagine, Like I first imagined it as like I met four hours today with the money stuff Committee. Like I was like typing on my computer. I was like, oh, there's a meeting. But in fact she met with like her lawyers, so she did. There were real meetings, but just she was the only director at the meetings, but they the committee
evaluated all fifty states to decide. It's like throwing darts, being like, which state should we move to, and like it just so happens that the best state turned out to be Texas. Coincidentally, the same thing that Elon Musk was treating about like two months ago. It's beautiful, So it worked out nicely.
Yeah, it's good that it turned out that way.
By the way, you asked her, if the laws move with them. I wrote this before there's some small chance of a Delaware judge saying, no, you're not allowed to move to Texas because you're only moving to Texas to pay Elon.
Musk more and which seems to reasonable.
That is like a violation of your pretty shadds to your Delaware shareholders, so we're gonna stop you. I wrote that in like January. I thought that was like some extremely funny theoretical chance of that happening. Since then, there's been like a Delaware court decision that makes it less likely. So I don't think that's gonna happen, but it would be really funny.
So I have one point, and I also have a question. I guess I'll start with the point and that is that there is like a human psychology component to this, because I remember when this happened in January that it was voided this pay package. My suggestion to Elon Musk would be, why don't you just have Tesla do a dividends. Mark Zuckerberg did that with Meta. Now he's going to make like seven hundred million dollars a year. Mark Zuckerberg obviously owns a lot more Meta share, so it makes
more sense there. But you made the point to me that Elon Musk isn't trying to make normal extremely wealthy man money. He has like insane aspirations that he needs all.
This money for.
He owns it. My aloraity of Tesla, he's a controlling herl. Everybody owns like twenty percent of the stock, so a dividend would go mostly to other people, and like they're not so rolling in cash, they could pay at like tens of billions of dollars or dividends. Mark Zuckerwood gets a dividend because he likes to go water skiing or whatever it is that he does, right, hoverboarding, He.
Has cows, right house, Yeah, archery.
I don't know all sorts of normal things hobbies. Yeah, like moderately expensive hobbies some of them. But Elon Musk's hobbies are like brain implants, going to Mars, buying Twitter. I'm forgetting a few, but like, he's not like looking to spend money on a nice vacation. He's looking to have tens of billions of dollars to fund going to Mars, and so he needs these giant pay packages every now and then to pursue his next ambition.
You're not going to get that from your dividend checks. And then my question for you is, what do you think is the most interesting way that this proxy.
Vote could turn out?
What would be the most interesting chain of events for you?
Look, I love the idea of a Delaware court preventing Musk from leaving for Texas. I think that would be extremely funny. But I actually think the simpler answer is funnier, which is if the shareholders vote this down, that's wild. Like he'll quit in a huff on Twitter like that day. Yeah, it'll be an amazing thread of tweets and it will
be an amazing corporate debacle. Whatever time he's devoting to Tesla, he'll go and devote to some other wild thing and that'll be wild, and Tesla will like find its way, as you know, it'll get back that fifty million dollars and find its way as a company not controlled by a wild, wild sequence of events.
Now, in my mind, would be the most interesting scenario as well, and then we could truly find out what the Elon Musk premium is.
The thing about Elon Musk companies is that if you're an investor in Elon Musk companies, like you like Elon Musk, like that's just how it goes, right, Like you're not there because you like the assets but think they're mismanaged, Like you're there because you like Elon Musk. It would be really shocking for the investors in an Elon Musk company to vote against them in such a striking way.
Do you want to talk about Elon Musk for like twenty five more minutes or do you think we should move on?
I saw your look of like I have wrapped this up so nicely, and then Matt comes in with more stuff. I have some more stuff, but if're gonna wrap it up, never.
Mind, Stay tuned, Stay tuned.
There's always more lock.
If you want to listen to the whole episode. We'll leave a link in the show notes, or you can find it by searching money Stuff the podcast wherever you listen to your podcasts. The elon Ink crew will be back in your feed tomorrow with a brand new episode.