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Elon Musk Cannot Keep Tesla Pay Package Worth More Than $55 Billion, Judge Rules

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DOVER, Delaware – Elon Musk does not have a right to the unprecedented compensation package that Tesla’s board of directors approved on Tuesday, which could be worth more than $55 billion.

Chancellor Kathleen St. Jude McCormick’s verdict comes more than five years after a shareholder lawsuit challenged Tesla CEO Musk and the company’s directors. They were accused of failing to fulfil their duties to the manufacturer of electric vehicles and solar panels, resulting in a waste of business assets and unfair enrichment for Musk.

The remuneration package, according to the shareholders’ attorneys, should be illegal because Musk dictated it and false negotiations with directors who were not independent of him led to its creation. They further asserted that shareholders who received inaccurate and incomplete information in a proxy statement approved it.

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Elon Musk Cannot Keep Tesla Pay Package Worth More Than $55 Billion, Judge Rules

Defence attorneys argued that an independent compensation committee fairly negotiated the pay plan, included performance milestones so lofty that some Wall Street investors mocked them, and was approved by a shareholder vote that was not even required by Delaware law. They also claimed Musk was not a controlling shareholder because he held less than one-third of the firm at the time.

A counsel for Musk and other Tesla defendants did not immediately respond to an email requesting comment.

However, Musk responded to the verdict on X, the social media network formerly known as Twitter that he owns, by providing business advice. “Never incorporate your company in the state of Delaware,” he said. He said, “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.”

Musk, who topped Forbes’ list of the world’s richest people on Tuesday, challenged Tesla’s board earlier this month to devise a new pay plan for him that would include a 25% interest in the company. On an earnings call last week, Musk, who presently owns 13%, said that while he cannot control the company with a 25% ownership, he does have a significant impact.

In the November 2022 trial testimony, Musk denied that he dictated the specifics of the compensation package or attended any sessions where the board discussed the proposal, its remuneration committee, or a working group that assisted in its development.

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Elon Musk Cannot Keep Tesla Pay Package Worth More Than $55 Billion, Judge Rules

McCormick concluded, however, that because Musk was a controlling stakeholder with a possible conflict of interest, the pay package needed to be held to a higher standard.

“The process leading up to the approval of Musk’s compensation plan was deeply flawed,” McCormick wrote in the colourfully written 200-page ruling. “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”

McCormick also mentioned Musk’s long-standing business and personal contacts with pay committee head Ira Ehrenpreis and fellow member Antonio Gracias. She also mentioned that general counsel Todd Maron, Musk’s old divorce attorney, was in the working group negotiating the pay deal. Maron served as Musk’s main intermediary, and the court noted in its decision that it was unclear which side of the argument Maron supported. Nevertheless, Maron created many of the documents that the defendants cited as evidence of a fair process.

McCormick concluded that the only appropriate action was to cancel Musk’s remuneration deal. “In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit,” she wrote in a statement. “The procedure came at an unreasonable cost. Through this litigation, the plaintiff seeks a recall.”

Greg Varallo, a lead attorney for the shareholder plaintiff, hailed McCormick’s move to rescind Musk’s “absurdly outsized” compensation deal.

“The fact that they lost this in Delaware court is jaw-dropping,” said Wedbush Securities analyst Dan Ives. “This verdict is unprecedented. Going in, I believe investors assumed it was just legal noise and that nothing would come of it. The fact that they went head-to-head with Tesla, Musk, and the board and overturned this is a significant legal decision.”

During his trial evidence, Musk disputed that his friendships with specific Tesla board members, which included several vacations together, meant they were likely to follow his orders.

The proposal intended for Musk to earn billions of dollars if Tesla, based in Austin, Texas, met specified market capitalization and operational targets. Musk, who held approximately 22% of Tesla when the plan was authorized, would get stock equal to 1% of outstanding shares at the time of the grant. If the company’s market valuation increased by $600 billion, his stake in it would rise to almost 28%.

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Elon Musk Cannot Keep Tesla Pay Package Worth More Than $55 Billion, Judge Rules

Each milestone entailed increasing Tesla’s market value by $50 billion while reaching aggressive revenue and pretax profit growth goals. Musk was only eligible for the full $55.8 billion pay plan if he led Tesla to a market capitalization of $650 billion and unprecedented revenues and earnings within a decade.

According to the plaintiff’s attorneys’ January post-trial brief, Tesla has met all twelve market capitalization milestones and eleven operational milestones, resulting in almost $28 billion in stock option profits for Musk. However, the stock option grants require a five-year holding period.

During the trial, defence counsel Evan Chesler argued that the incentive package was a “high-risk, high-reward” transaction that benefited Tesla stockholders and Musk. After the plan was implemented, the company’s worth increased from $53 billion to more than $800 billion, briefly reaching $1 trillion.

According to Chesler, Tesla included the $55 billion pay amount in the proxy statement because the business wanted shareholders to understand that “this was a heart-stopping number that Mr. Musk could earn.”

SOURCE – (AP)

Business

Walmart To Acquire Smart TV Maker Vizio For $2.3 Billion In Bid To Boost Its Advertising Business

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Walmart is paying $2.3 billion for smart TV maker Vizio to boost its quickly growing advertising business and compete with Amazon.

If the purchase is completed, Walmart will gain access to Vizio’s SmartCast operating system, allowing the retail juggernaut to offer its suppliers the opportunity to display adverts on streaming devices.

Walmart Connect, which provides marketers with access to Walmart’s large consumer base, has helped the company grow its media and advertising business. Walmart reported on Tuesday that its global advertising business increased by nearly 28% to $3.4 billion last year.

The developments follow Amazon’s announcement last month that it will begin charging Prime members $2.99 per month to keep their films and TV series ad-free, in addition to the $14.99 per month or $139 per year Prime price.

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What does Walmart stand to gain from a television manufacturer?

Vizio’s SmartCast technology has 18 million active accounts and has increased 400% since 2018. The firms claim that Vizio’s platform has over 500 direct advertisers and that ads now account for most of the company’s gross profit.

In recent years, makers of streaming gear, such as Roku and Vizio, have moved their focus to advertising revenue. Vizio established its Vizio Ads business unit in 2019, claiming to be “one of the few connected TV companies with the device penetration, consumer opt-in, and infrastructure to deliver meaningful scale.”

Walmart saw Vizio’s growing consumer base and grabbed the opportunity to develop its Walmart Connect business.

“We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment,” said Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S.

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Who else is ramping up screen advertising?

Other large streamers, such as Netflix and Disney, have embraced the dual model, allowing them to generate revenue from commercials while simultaneously allowing customers to opt-out for a higher charge.

However, in the ever-changing streaming industry, whether consumers are prepared to pay more to see fewer commercials when they already pay subscription fees, frequently for numerous providers, remains to be seen. Many consumers “cut the cord” and ditched cable TV because they were frustrated with their ever-increasing fees.

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How did the companies’ shares fare?

Vizio stock rose about 15% in the afternoon, reaching $10.96 per share.

Walmart’s stock jumped 3.1% to $175.66 per share after exceeding Wall Street’s expectations with its sales and profit on Tuesday.

Roku, one of Vizio’s primary competitors, saw its stock drop 6.4% by midday.

SOURCE – (AP)

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Sacked Twitter Staff In Ghana Finally Get Pay-Off

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X, then known as Twitter, has finally paid out the employees it fired from its African offices more than a year ago, according to the agency that represents them.

Most had just been with the social media network in Ghana’s capital, Accra, for a few months before they were let go in November 2022.

They had threatened to sue X for failing to pay the redundancy money they said they were promised.

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Sacked Twitter Staff In Ghana Finally Get Pay-Off

The corporation has yet to respond.

X previously stated that it had paid ex-employees in full.

Elon Musk, who took over the corporation in 2022, launched a large global workforce layoff, dismissing almost 6,000 individuals. He said he was losing more than $4 million (£3.5 million) daily.

The African contingent, which numbered fewer than 20, had only recently relocated to X’s new office in

Accra after eight months of working from home during the COVID-19 outbreak.

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Sacked Twitter Staff In Ghana Finally Get Pay-Off

Agency Seven, the organisation providing legal representation to the workforce, stated that it had successfully obtained a redundancy settlement and repatriation fees for foreign employees but did not indicate the payout size.

“They are very pleased to finally be able to get their due, put this behind them, and look forward to the future,” Agency Seven Seven spokesperson Carla Olympio told the BBC.

Last year, terminated employees told the BBC that their treatment at X had impacted their mental health and money.

“It’s difficult when it’s the world’s richest man owing you money and closure,” one of them stated.

They claimed they were initially assured that they would be paid to work for one more month while their contracts were being terminated. However, they were instantly shut out of their emails, and no more wage payments were issued.

Since then, the crew has reported a difficult battle for compensation.

Some had migrated from adjacent nations, such as Nigeria. Their contract was terminated, leaving them and their families stuck in Ghana.

In a rare interview with the BBC last April, Mr Musk revealed that the social media powerhouse had 1,500 staff, down from just under 8,000 when he bought the company.

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Sacked Twitter Staff In Ghana Finally Get Pay-Off

When the news of Mr Musk’s extreme workforce reduction broke, he tweeted that laid-off employees received three months’ severance compensation.

However, staff members in the Africa office claim they still need this.

According to Agency Seven Seven, X only started negotiating with the terminated African staff after the BBC publicised the news.

Last year, ex-employees filed a complaint in a California court accusing X of failing to pay at least $500 million in promised severance benefits.

SOURCE – (BBC)

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TikTok Faces European Union Scrutiny For Possible Breaches Of Strict New Digital Rulebook

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Why Buying TikTok Views is the Best Way to Maximize Followers

LONDON — The European Union announced Monday that it is investigating whether TikTok violated the bloc’s harsh new digital standards for cleaning up social media and keeping internet users secure.

The European Commission, the EU’s executive department, said it has “opened formal proceedings to assess” whether TikTok violated the Digital Services Act, which went into effect last year.

The DSA is a comprehensive collection of regulations to keep internet users safe online, including measures to make it easy to flag dangerous or unlawful content such as hate speech, provide users with alternatives to algorithmic suggestions, and prohibit adverts targeting children.

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TikTok Faces European Union Scrutiny For Possible Breaches Of Strict New Digital Rulebook

The commission is looking at whether TikTok is doing enough to address “systemic risks” posed by its design, such as “algorithmic systems” that may promote “behavioural addictions.” It added measures such as age verification software to prevent children from accessing “inappropriate content” may not be “reasonable, proportionate, and effective.”

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TikTok Faces European Union Scrutiny For Possible Breaches Of Strict New Digital Rulebook

“Minor protection is the DSA’s primary enforcement priority. TikTok, as a platform that reaches millions of children and teens, must completely comply with the DSA and plays an important role in the protection of minors online,” said Thierry Breton, the EU’s internal market commissioner, in a news statement. “We are launching this formal infringement proceeding today to ensure that proportionate action is taken to protect the physical and emotional well-being of young Europeans.”

TikTok has “pioneered features and settings to protect teens and keep under 13s off the platform, issues the whole industry is grappling with,” the business stated in a statement. “We’ll continue to work with experts and industry to keep young people on TikTok safe, and look forward to now having the opportunity to explain this work in detail to the Commission.”

The commission also looks into TikTok’s minor privacy policies, ad transparency, and whether researchers can access data.

tiktok

TikTok Faces European Union Scrutiny For Possible Breaches Of Strict New Digital Rulebook

The EU has designated nearly two dozen of the largest internet and social media companies, including TikTok, deserving the most intense scrutiny under the DSA and heavy fines if they fail to comply. The bloc is already probing Elon Musk’s X, formerly known as Twitter, for breaches such as failure to control the dissemination of illicit content.

SOURCE – (AP)

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