- In today’s CEO Daily: Geoff Colvin on Elon Musk’s $1 trillion pay package.
- The big story: Long delays at U.S. Airports as FAA reduces flight capacity amid shutdown.
- The markets: It’s bad out there!
- Plus: All the news and watercooler chat from Coins2Day.
Good morning. For Elon Musk, the Texas gambit seems to have worked—great news for Musk, bad news for shareholders of U.S. Companies.
TL;DR
- Tesla shareholders approved Elon Musk's $1 trillion compensation package, potentially valued at $1 trillion.
- A Delaware judge voided Musk's previous package, prompting states like Texas to offer more favorable corporate laws.
- Texas law requires shareholders to own 3% of stock to sue, effectively insulating companies from accountability.
- States are competing to attract corporations, risking a race to the bottom in corporate oversight regulations.
Shareholders at Tesla's annual gathering on Thursday approved a massive, unprecedented compensation plan for CEO Musk, potentially valuing his stock at $1 trillion over several years. This deal presents no downside for Musk, as the package's terms mean he has nothing to forfeit. However, the events leading up to this decision are concerning.
In 2018, the Tesla board approved a decade-long compensation plan for Musk, potentially worth $55.8 billion if specific financial goals were met over ten years, setting a new benchmark for CEO compensation at the time. A Tesla shareholder filed a lawsuit against Musk and the board, alleging a breach of fiduciary responsibilities. Following extensive legal proceedings, a Delaware judge ruled against Tesla and Musk, voiding the compensation package. This decision raised concerns among other corporations about Delaware's suitability for incorporation. In response, Delaware enacted legislation in March to enhance its appeal, prompting Texas to introduce an even more favorable law. A significant aspect of the Texas law is that lawsuits against companies, similar to the Delaware case, can only be initiated by shareholders possessing at least 3% of the company's stock. Musk is the sole individual holding over 3% of Tesla's shares. This summer, Tesla relocated its incorporation from Delaware to Texas, where its board subsequently presented Musk with a new, substantial compensation offer.
Supporters of the pay package, which apparently received 75% of the shareholder votes at the meeting, will argue that it aligns management and shareholder interests (to get the trillion-dollar payout, Musk must meet a series of milestones, including boosting Tesla’s market cap to $8.5 trillion from its current $1.5 trillion). But what’s good for corporations and management is not always good for shareholders, and rules like the Texas 3% threshold insulate companies from accountability—they whittle away shareholder protections, such as the right for any shareholder to sue a company. And in doing so, they minimize the judiciary’s role in overseeing corporate conduct, weakening the system that has built the extraordinary U.S. Economy.
The fight to attract big corporations is heating up as states hope to take away some of the incorporation fees and the business litigation that bring Delaware some $2.2 billion annually. Nevada is on its way; Dropbox and TripAdvisor are among those that have reincorporated there since last year. Oklahoma Gov. Kevin Stitt has said, “I’m trying to take down Delaware.” Competition is good. The danger is that as states vie to become corporations’ legal homes, the competition risks becoming a race to the bottom.—Geoff Colvin
Contact CEO Daily via Diane Brady at [email protected]
Top news
U.S. Airports meltdown as shutdown goes on
Here is the list of 40 airports that will experience diminished flight capacity starting today because of the federal government's shutdown. Republicans haven't reached an agreement with Congress to cease the shutdown, which appears set to continue. Long delays are already kicking in at New York-area airports. “Tomorrow is gonna be a nightmare. Tomorrow, the FAA will just shut down. Get out while you can,” one Newark Airport worker told The NY Post.
Trump expands Medicare coverage for weight-loss drugs
President Donald Trump announced on Thursday, agreements were reached with pharmaceutical leaders Eli Lilly and Novo Nordisk, intending to reduce the price of widely used weight-loss drugs like Ozempic and Wegovy. Beginning in January 2026, Medicare and Medicaid recipients will be able to acquire these medications via a new TrumpRx.gov portal for approximately $350 monthly, a significant decrease from the current cost, which can reach up to $1,350.
Layoffs in October soared
A new report from Challenger, Gray & Christmas found layoffs in October saw a 175% increase compared to the previous year and a 183% rise from September, according to Andy Challenger, chief revenue officer at Challenger. “Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes,”
Microsoft announces new “superintelligence” team
Mustafa Suleyman, who heads consumer AI at the company, revealed the establishment of the new MAI Superintelligence Team on Thursday. This team, operating under the larger Microsoft AI umbrella and spearheaded by Suleyman, will focus on achieving “humanist superintelligence (HSI),”, a goal Suleyman described as “incredibly advanced AI capabilities that always work for, in service of, people and humanity more generally.”. Suleyman discussed this new endeavor with Coins2Day. Here.
Trump warms to India on oil and trade
President Trump said India “has largely stopped buying oil from Russia,” is slated for a visit by him in 2026, with Washington and Delhi currently in the process of renegotiating a trade agreement. India is presently subject to 50% tariffs.
Pelosi retires and Dems begin generational civil war
Nancy Pelosi, 85, announced her retirement a younger cohort of Democrats is increasingly chafing at the older leadership, exemplified by Former President Biden, 82, who guided them to a loss in the previous presidential election. Targeted by this sentiment are figures like U.S. Rep. John Larson of Connecticut, 77; U.S. Rep. David Scott of Georgia, 80; and former House Majority Leader Steny Hoyer of Maryland, 86.
The markets
S&P 500 futures are up 0.17% this morning. The last session closed down 1.12%. STOXX Europe 600 was flat in early trading. The U.K.’s FTSE 100 was down 0.48% in early trading. Japan’s Nikkei 225 was down 1.19%. China’s CSI 300 was up 0.31%. The South Korea KOSPI was down 1.81%. India’s NIFTY 50 is down 0.1%. Bitcoin was down to $100.9K.
Around the watercooler
The crypto market may be out of gas as Bitcoin dips under $100k and alt-coins plummet by Carlos Garcia
Jamie Dimon predicts AI will shorten the workweek: ‘My guess is the developed world be working three-and-a-half days a week’ by Eva Roytburg
A Silicon Valley billionaire, still smarting from Zohran Mamdani's win, recalls Peter Thiel's 2020 caution regarding socialism's allure.By Marco Quiroz-Gutierrez and Nick Lichtenberg
Experts discuss how Zohran Mamdani, New York's inaugural millennial Mayor, will distinguish his leadership approach from that of his boomer predecessors.By Jessica Coacci
CEO Daily is compiled and edited by Joey Abrams and Jim Edwards.