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Tesla CEO and tech entrepreneur extraordinaire Elon Musk seems to have once again gotten exactly what he wants from his shareholders. This time, that’s two things: Approval for the reinstatement of his massive $50 billion pay package, and the green light to move the electric car business domicile from Delaware to Texas.
Musk’s incentive-based pay package, currently estimated to be worth about $50 billion, was struck down in January by Delaware Chancery Court Judge Kathaleen McCormick, who described it as “unfathomable.” Musk responded with an angry post on his social network X: “Never incorporate your company in the state of Delaware.” Hence the two votes before shareholders last week to put the pay package back and move to a state where McCormick’s ruling does not reach.
Last week’s vote doesn’t necessarily change anything for Musk’s compensation right away. The Delaware case is still pending; it’s been tied up over concerns on paying legal fees, and can still be appealed by Musk. The shareholders behind the original lawsuit can also appeal the decision to the Delaware Supreme Court. And it’s not clear if the shareholder vote, which is nonbinding, will be accepted by McCormick. Bloomberg reported at least three more Tesla shareholder lawsuits against Musk were filed in Delaware’s Chancery Court last week, meaning a move may be further complicated.
“Legally, this is very unsettled—nothing like this has been done before,” Tulane University professor Ann Lipton told Forbes.
Musk’s own feelings about the votes were clear on X, where he posted a picture of a cake with the Latin phrase “Vox populi, vox dei”—the voice of the people is the voice of God—as a parting gift to Delaware. And investors found renewed confidence in the electric car maker, giving shares as much as a 7% boost after the vote results were announced.
The big question here is what this vote really gets, other than Musk being able to say he got his way and a new state in which Tesla will file its articles of incorporation. Delaware is not likely to be losing much. The Delaware News Journal reports two-thirds of Fortune 500 companies are incorporated in the state, which is home to more corporations than people. The cancellation of Musk’s pay package temporarily removed him from Forbes’ ranking as the world’s richest person, but he was back in the top slot as of Friday. More money will no doubt solidify his standing there, but what else would it do? After all, before this legal ruling, he’d already asked to control 25% of Tesla’s stock—3% more than the disputed pay package would give him.
For the first time in nearly two decades, the number of women in the C-suite dropped last year, according to a recent report from S&P Global. Peterson Technology Partners Chief Digital Officer Tulika Mehrotra—who is the only woman in her company’s C-suite—said she is not surprised by those numbers. I talked to her about why it is important to have women in the C-suite and how companies can get the numbers increasing again. An excerpt from our conversation is later in this newsletter.
Until next time.
ECONOMIC INDICATORS
The good news on inflation is that it’s at its lowest level in more than three years. The bad news is that it’s still at 3.3%, and the Federal Reserve is now expecting just one interest rate cut this year. The consumer price index for May was released the same day as the Fed’s policy-setting Open Markets Committee met last week, and there were no expectations that the CPI report would change minds and lead to any immediate rate cuts.
As far as inflation goes, May’s report was actually better than consensus economist estimates, which predicted a 3.4% overall inflation rate. But that’s still above the Fed’s historically acceptable 2% target.
At the press conference after the committee meeting, Fed Chair Jerome Powell said that the inflation rate is very important, but they’re also looking at other economic factors when weighing the possibility of rate cuts—including employment figures and GDP.
“We do see today’s report as progress and as, you know, building confidence. But we don’t see ourselves as having the confidence that would warrant beginning to loosen policy at this time,” Powell said.
ARTIFICIAL INTELLIGENCE
At Apple’s annual Worldwide Developers Conference last week, CEO Tim Cook unveiled “Apple Intelligence,” the company’s banner name for the generative AI functions coming to Apple products. Apple Intelligence will be available on users’ newer model iPhones, Macs and iPads, and will be able to improve email writing; generate images, emojis and video slideshows from a typed or spoken prompt; easily search photo and email data; and upgrade the Siri assistant to have more recall and contextual capabilities. OpenAI’s ChatGPT will also be integrated into the phone and available to users.
In its announcement, Apple addressed the privacy concerns many users have about generative AI technology. Because of the compute power needed, certain generative AI functions happen in the cloud, meaning user data travels somewhere out of their control. Forbes senior contributor John Koetsier writes many of the Apple Intelligence functions will happen on devices themselves, so that data stays local. Forbes senior reporter Robert Hart adds that Apple is also prepared for a future of higher-level generative AI applications, developing a new privacy-preserving way of sending encrypted data to cloud servers when necessary. The ChatGPT integration with Apple Intelligence is not automatic, Koetsier writes; users will need to give permission to share their data with ChatGPT before their query is sent.
Analysts and investors have been enthusiastic about Apple Intelligence. Apple Intelligence will run on the next iteration of iOS and will need at least an iPhone 15, which launched last September. Analysts say the beta launch of Apple Intelligence this fall could drive many users to upgrade their devices, which in turn bolsters Apple’s revenues. Last week, Apple stock hit an all-time high with shares crossing $200 for the first time ever. That enthusiasm bolstered Apple’s market cap, briefly surpassing Microsoft as the world’s most valuable company, and putting it in position to easily slide back into the top slot.
NOTABLE NEWS
A new academic study shows that hybrid work may be a good thing for both productivity and worker performance, a Stanford University economist wrote in the journal Nature. Forbes’ senior editor Jena McGregor writes that the study, which looked at 1,612 global workers at Trip.com, looked at employees who worked from home two days a week compared with some who worked in the office all five days. The group with the hybrid schedules had a one-third lower attrition rate and higher work satisfaction scores. There were also no significant differences between the two groups when it came to performance reviews or promotion rates.
Still, work-from-home rates are at their lowest level since spring 2020, according to new data from WFH Research. Only 26.6% of paid workdays in the U.S. were done from home in May, down from the pandemic peak of 60% and 28.6% in May 2023. Almost two-thirds of employees in the report—62%—were fully on-site, while 13% were fully remote and 26% were hybrid. While more people are going into the office now, WFH Research expects more remote work, as technology improves and remote collaboration becomes even more effective.
TOMORROW’S TRENDS
Peterson Technology Partners Chief Digital Officer Tulika Mehrotra On Why More Women Need To Be In The C-Suite
For years, there have been concerted efforts to get more women into the C-suite, but a recent study from S&P Global found women’s share of top corporate leadership roles dropped last year for the first time in nearly two decades. Tulika Mehrotra, chief digital officer at Peterson Technology Partners, said she wasn’t surprised by the findings. She’s the first woman in the C-suite of her company in its 26 years, and says companies lose out when women aren’t among their leaders. I spoke to her about her path toward leadership and why it’s important for women to break more glass ceilings. This conversation has been edited for length, clarity and continuity.
What has your journey to the C-suite been like, and kind of what were some of the some of the challenges that maybe were different for you because you are a woman?
Mehrotra: My journey was a little bit interesting because it also overlapped with the pandemic. I was a consultant, and then I was brought in full time, and then I was building a very large team. I asked for the position. I suggested it and it was considered, and weeks later it was granted.
It was me creating space for myself. This is something that a lot of women don’t feel comfortable doing, and it’s a mistake. Women really need to speak up. In the past, the verbiage has been ‘lean in.’ But really, I think you have to just raise your hand and say, ‘I’m already doing the job.’
I have a history of pivoting in my career. I’m also an author, I’ve written fiction for Penguin, I was also a journalist, I had my own consulting company, I worked for startups. My journey has been just an extension of what I’ve already been doing, which is just creating the role that I would like to be in. Very often, you audit the environment and the landscape and you recognize: Here’s a gap, here’s a position that needs to be filled, or here’s something that needs to be corrected. If you can do that, whether you’re male or female, you’re automatically creating value for the organization.
As a woman with two small children—my children are four and five now; I had newborns when this was happening—it was a challenge on a personal and a professional level. I think it came down to what I wanted. There’s no judgment to what other women choose, or what they would like to do. For me, it was very much diving in and proving that I could do it. I also have a village supporting me. I have a CEO who gives me the autonomy to do the work that needs to be done. He also doesn’t understand the marketing and the digital marketing aspect of things. There’s an inherent trust. If you have that in an organization, then automatically, male or female, you’re going to be in a position of advantage. For me, I was able to work with flexibility with two babies in an environment where they trusted me to do the work and make the decisions.
You make decisions and you’re able to look at the 360. And so you don’t wait for permission. Very often you just have to get the work done, because if the storm is approaching and you’re waiting for approval for this or that, it might be better to just apologize later if it’s the wrong decision. Very often, women have a better EQ and are able to see things that you don’t need 20 layers of hierarchy to get approval on. So I very much took the bull by the horns and made the position what I wanted it to be.
What is lost when there aren’t women in the C-suite? And what is gained when there are women there?
The lack of diversity is really significant. Seatbelts don’t fit women. When there’s a car accident, a woman is more likely to die. There has not been testing on seatbelts. That’s unbelievable to me. It’s 2024! The testing that is done on medicine is on male animals. There’s a significant risk to the health and safety of 50% of our population. This is moms, sisters, wives. This is everybody. This affects everyone.
McKinsey had a study that said, if you have women in the C-suite, it automatically improves your bottom line. You have better growth, you have better innovation if you have just a few more women. If you don’t, the exact opposite is happening. It’s having a real impact, an economic impact, under-utilizing the women in the workplace. If you don’t have diverse executive teams, creativity automatically suffers. You have a hom*ogenous group, you’re going to get the same answers for the same things. We’re in the age of AI, where everything basic can be done by a machine, so you really, really need creativity.
There should be a massive pushback. I think the negatives are so tremendous that they can’t be ignored.
The positives are the exact opposite. They’re able to build that pipeline, they’re able to start to do work differently. The future of work is not what it used to be. Henry Ford said, “If I had asked my customers what they wanted they would have said a faster horse.” They wouldn’t have wanted a car. Right now, we’re in the age of AI where everything is blowing up. On the positive side, as we get more women in the C-suite and get more creativity and get more changes, things are blowing up anyway. There’s always opportunity in chaos. It’s a real opportunity for men and women to come together and build something new, because something new is being built anyway.
What do you think it will take for the numbers to go back up for women in the C-suite? When do you think that will happen?
Certainly flexible work environments and arrangements are still going to be necessary. That does not take away from a corporation. I know a lot of bosses pushed back and said, ‘Get back to the office.’ But if you can’t give your female employees the flexibility to pick up their children or take them to the doctor when they’re sick—dads do that, too. I think there needs to be a flexible work understanding,
I think there also has to be a very clear path to promotion. About diversity, it is going through a massive transformation, but there’s got to be some kind of diversity training. There’s going to have to be more consultants or HR training or something that helps team members understand that it’s not a bad thing.
There does need to be some kind of accountability. If that is connected to KPIs or performance reviews, in terms of who’s being hired and who’s being let go, that’s going to make a huge difference.
Finally, recruitment biases and practices have to be addressed head on. The company I’m with, we do IT consulting and recruiting, and we are very clear about recruiting bias. You cannot have bias on a person’s name, on their gender, on their age. That needs to be really head-on, on figuring out how to make this work.
I don’t think this is going to happen overnight, because that self-selection aspect is also huge. There’s a lot of women that have chosen: I don’t need to deal with this B.S. If this B.S. is going to continue, I’m going to take my genius skills elsewhere.
FACTS + COMMENTS
Activist firm Elliott Investment Management took a large stake in Southwest Airlines last week, calling for the ouster of CEO Bob Jordan and board chairman Gary Kelly.
11%: Proportion of Southwest Airlines Elliott owns, a stake worth $1.9 billion
$49: Share price Elliott believes Southwest can achieve in 12 months. As of Friday, the airline’s stock price was $28.38
‘I have no plans to resign’: Jordan told reporters last week
STRATEGIES + ADVICE
More companies have been adding chief AI officer roles to their C-suites. Here’s what that job looks like so far at some of those businesses.
High interest rates have made borrowing money more challenging, but businesses have capital needs that don’t go away. Here are five factors to consider before you borrow.
VIDEO
QUIZ
Sony Pictures made an unexpected acquisition last week. Which company did it buy?
A. Red Lobster
B. Alamo Drafthouse
C. Poppi
D. Express
See if you got the answer right here.
