How About A $1 Trillion Pay Package?

Good morning! Here is the latest in trending:

Going bearish: Michael Burry’s ‘Big Short’ instincts target the AI trade with puts on Nvidia (NVDA) and Palantir (PLTR). The latter stumbled after-hours yesterday despite solid quarterly results and guidance.

Merger Monday: Kimberly-Clark (KMB) announced a $48.7B deal for consumer healthcare products company Kenvue (KVUE). Now, some analysts say the Tylenol maker may see interest from other suitors.

What about tariffs? The latest Wall Street Breakfast survey received nearly 3,000 responses. See what subscribers think of President Trump’s tariffs and the economy.

Tesla (TSLA) shareholders are bracing for a big vote this week that will determine whether CEO Elon Musk will be awarded a new $1 trillion pay package. The compensation is tied to various milestones, including the delivery of 20M Tesla vehicles, 1M robotaxis and 1M Optimus robots, and growing Tesla’s market cap to $8.5T over the next decade (5x its current level). Chances are high that the package will pass, given that each of the 12 pay tranches is tied to specific achievements, though some investors are starting to express concerns ahead of the annual shareholder meeting.

Against: “While we appreciate the significant value created under Mr. Musk’s visionary role, we are concerned about the total size of the award, dilution, and lack of mitigation of key person risk—consistent with our views on executive compensation,” Norway’s massive sovereign wealth fund said in a statement. While it’s the first major institutional investor to reveal how it voted, it’s one of the smaller stakeholders, like CalPERS, the New York State Common Retirement Fund, and the New Mexico State Investment Council – which are also against the remuneration package. Shareholder advisories like ISS and Glass Lewis have cited similar worries about size and board independence.

On the other side of the fence is the “for” camp. Cathie Wood’s ARK Invest has called Musk “the most productive human being on earth” and essential for Tesla’s future “AI juggernaut” strategy. The State Board of Administration of Florida and Baron Capital agree, while notable Tesla (TSLA) bulls like Dan Ives and others are out there rooting for Musk. “The award is only achieved IF he hits exceptionally ambitious market-cap and operational milestones,” Michael Dell wrote on X. “If he succeeds, shareholders will win big through unprecedented value creation, and he will earn added voting rights to continue driving @Tesla’s long-term vision.”

The breakdown: Musk currently owns around 15% of Tesla; another ~40% is owned by the retail crowd that has been traditionally loyal to him, while the last 45% is owned by institutional investors such as Vanguard, BlackRock (BLK) and State Street (STT). That should be more than enough to get the vote approved at the meeting, which will also decide on additional items like strategic investment in Musk’s artificial intelligence venture xAI. Interestingly, Musk’s prior 2018 pay package is still facing legal trouble, with a review ongoing at the Delaware Supreme Court. (2 comments)

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Today’s Markets

In Asia, Japan -1.7%. Hong Kong -0.8%. China -0.4%. India -0.6%.
In Europe, at midday, London -0.6%. Paris -1.3%. Frankfurt -1.3%.
Futures at 6:30, Dow -0.7%. S&P -1%. Nasdaq -1.3%. Crude -1.5% to $60.13. Gold -0.3% to $4,003.20. Bitcoin -3% to $104,418.
Ten-year Treasury Yield -2 bps to 4.09%.

On The Calendar

Companies reporting today include Advanced Micro Devices (AMD) and Pfizer (PFE).

See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar.