Happy Friday! The S&P 500 hit a fourth-straight record high yesterday following a cooler-than-expected producer price index report for May.

Today’s edition covers Tesla’s shareholder vote on Elon Musk’s pay package, Ukraine’s new funding, and Apple’s deal for ChatGPT.

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Elon secures the bag

Elon Musk won’t be celebrating his $56 billion pay package alone. 

Even before the vote was finalized Thursday, Wall Street fueled Tesla stock to a 3% gain on the prospect of a green light.

Shares climbed further after hours.

The stock rally said what detractors could not: The market recognizes the value Musk generates for shareholders. 

If you gauge the vote based on shareholder value alone, the approval looks like table stakes.

Eccentric as he may be, Musk has generated enormous stock returns over the last several years, and investors know Tesla can’t afford to lose him. 

The decision to keep Musk’s payday intact — and move Tesla to Texas — passed by a healthy margin.

“Capitalism lives to fight for another day,” said Nancy Tengler, the chief executive of Laffer Tengler Investments.

“What the retail shareholder understands is that not only did Elon create value for Tesla shareholders during that period, but he has and is creating value for society.”

To be clear, critics are indeed correct in saying $56 billion is a ridiculous pay day.

It’s an absurd amount of money — but it’s going to someone who generated an absurd degree of shareholder value that, just a few years ago, was deemed impossible. 

Tesla first approved the package in 2018, when the stock changed hands at about $23.

They agreed then that Musk would be granted the option to buy more than 300 million shares if he met a series of extreme revenue and valuation goals, which no one expected him to do. 

Musk, meanwhile, agreed to receive nothing if he fell short. 

For context, here’s how New York Times reporter Andrew Ross Sorkin described the arrangement at the time:

“If Mr. Musk were somehow to increase the value of Tesla to $650 billion — a figure many experts would contend is laughably impossible and would make Tesla one of the five largest companies in the United States, based on current valuations — his stock award could be worth as much as $55 billion.”

Musk has accomplished these ambitions.

But critics have nonetheless called foul — for reasons ranging from business to politics to ostensible sense of fairness. 

Markets have shrugged off those concerns for now. 

It’s still possible that legal snags in Delaware muddy the matter in the coming months, as the shareholder vote was more symbolic than binding. But that’s for another day.

"Some days it is hard to be a TSLA bull but today isn’t one of them,” Tengler said.

“But this investor owns the stock because of Elon not in spite of.”

Are you more bullish or bearish on Tesla for the next 12 months? Hit reply to this email or let me know on X @philrosenn.

*At a glance:

Elsewhere:

📉Inflation continues to level off. The producer price index — which tracks inflation before it hits consumers — declined 0.2% in May compared to April, the Labor Department reported Thursday. A drop in gas prices helped pull the gauge lower. To be clear, the measure doesn’t mean prices are falling. But it’s the latest sign that the rate of price growth is letting up. (Yahoo Finance)

🇺🇦G7 agrees to fund Ukraine with Russian assets. President Biden met with European leaders at a summit in Italy and agreed to tap frozen Russian assets to back a loan of up to $50 billion. Meanwhile, Biden and Ukraine President Volodymyr Zelensky are set to unveil a bilateral security agenda. (WSJ)

🤖 Apple isn’t paying OpenAI for ChatGPT — at least not with cash. Apple believes including OpenAI’s product and pushing it to hundreds of millions of dedicated users is worth as much as any financial package, sources say. ChatGPT gets mass distribution while the iPhone maker gets buzzy new tech. (Bloomberg)

Rapid-fire:

• Jobless claims surge to the highest level in 10 months (MarketWatch)

• US mortgage rates dropped for a second consecutive week (Bloomberg)

• Bank of America forecasts that Broadcom could be the next trillion-dollar stock (Business Insider)

• How the near-blockbuster takeover of Paramount fell apart (FT)

• Under President Milei, Argentina has the best-performing bonds in emerging markets (Bloomberg)

Last thing:

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