Elon Wins $46B Pay Package & Why Disney Needs 'Inside Out 2’ Not to Flop

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0:26Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Tesla shareholders voted to reinstate Elon Musk's gargantuan pay package. But what does it mean for the automaker's future? And Disney's Pixar is hoping that Inside Out 2 is the movie that helps it get its swagger back. It's Friday, June 14th. Let's ride.

0:51Well, it's our final episode before Father's Day, which is coming up this Sunday. So we want to wish a happy Father's Day to all the dads out there, and to our dads in particular, Rich and Eric, who are both loyal MBD listeners. Toby, I feel like we already have a lot of dad properties because we both fall asleep on the couch watching sports. Absolutely. Yeah, Father's Day gets a little lost in the shuffle sometimes. The way I always remember it is it falls on the last day of the U.S. Open for golf. So it's always tough because I know some kid out there is giving his father a major championship for Father's Day.

1:24Well, I get him a phone call. But you know what? Sometimes that phone call is just as important as a major. So make sure you don't neglect it. or if Father's Day isn't your thing, call someone else you love. Use Sunday as an opportunity to connect with the people in your life. Or you could just buy a smoker. I mean, that always hits. That always hits. Now let's hear a word from our purple prince, Yahoo Finance. Neil, you've totally corrupted me. You've always called it Yahoo Finance. And now I can't get it out of my head. Oh, I like the je ne sais quoi it gives it. Yahoo Finance, boring, regular finance platform.

1:56Yahoo Finance, real-time market data, trusted news updates, and the go-to place for growing your wealth. Now I'm sold. I'm a finance guy. It's a name more fitting for a purple prince anyway, plus more fun to say. If you want to see the magic of Yahoo Finance in action, download the Yahoo Finance app on the Google Play or App Store. Tuesday on NBC, Jimmy Fallon and Bozema St. John host a highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea.

2:34This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. In a game of chicken with shareholders and the Delaware court system, Elon Musk has come out on top and a whole lot richer. Yesterday, Tesla shareholders voted to re-approve the contentious and lucrative pay package that is set to net Elon$46 billion based on recent valuations. The package was originally approved back in 2018, then nullified by a Delaware judge after a lawsuit filed by a shareholder before the show of support yesterday.

3:12But even though Elon and his brother Kimball were sending tweets and taking victory laps saying that now that it's settled, Tesla can get back to work, it's not actually clear where it leaves the pay package legally speaking. Experts say it's a little murky on whether a Delaware court will accept the revote at all. It also leaves Tesla in an odd spot. Yes, the fear was Elon might leave to go work on his myriad of other companies if the package wasn't approved. But now that it has been, the juicy incentive-laced carrot is no longer dangling in front of him. So why grind like he has in the past?

3:43So this was a nice vote of confidence in Elon and will placate him for now. But it's still a little unclear as to what the result means for Tesla going forward. Yeah, I mean, this wasn't just a vote on a pay package. It wasn't a vote on dollars and cents. It really was a vote of confidence in whether you want Elon Musk to lead this company. I mean, he's got a zillion other projects going on. Tesla's share price has flagged 25 percent this year as opposed to the S &P's 15 percent return. So this was individual shareholders who own the majority of all shares in Tesla saying, do we think Elon is the right person in charge for our company going forward?

4:19That has been a question recently. It would never be a question when this pay package was approved in 2018. But it is a question now as he's got a zillion other projects going on. But this was a vote of confidence in saying, yes, Elon is our guy. We're sticking with him. We want him to lead Tesla into the future. Yeah. If we just go back to 2018, why was this contentious at all? According to the Delaware court ruling, the company's board, they said, was too intertwined, too connected with Elon Musk to exercise independent judgment, which is why the court argued that the pay terms were unfair to shareholders.

4:51So what were the arguments for or against this pay package for? Like we said, given his other ventures, X, SpaceX, XAI, et cetera, I guess, the argument is that you need this to keep focus on Tesla. But the argument against it is that it's just a massive, massive pay package. And it was granted by a favorable board that was too influenced at the time. So Tesla did not shy away from this vote either. Like it was a full on campaign where Elon was doing this multi-week push on X on Twitter, campaigning to get this approved. So there was this lobbying campaign around it because they needed shareholders to turn out in mass to approve this.

5:29Yeah, this was the only question on the shareholder ballot as well. after this Delaware judge struck down the pay package. Elon was very angry at Delaware and said, we're moving to Texas. So he put it up for a vote saying, would you want us to reincorporate in Texas? And he said, no one should really reincorporate in Delaware, which is home to many of the biggest companies in the country. And they did vote to move Tesla to Delaware. So maybe that will cause a wave of companies to also reincorporate elsewhere from Delaware, which may be seen as hostile towards corporations. Historically, it's seen as a place that adjudicates corporate matters with more expertise than anywhere else.

6:10So that was another thing on this ballot that happened. One final outstanding question is how much the lawyers who sued and won over the 2018 pay package deal will take home because they asked, back in March, they asked the court to grant them 29 million Tesla shares, which are worth around$5 billion as payment for the work. But now that the shares have been restored to Musk, it's a little hard for the attorneys to argue that they actually did anything because they lost the shareholder vote. So that is something that there's a court case set in July where they'll kind of re-argue this case. Toby, you're always thinking about the little guy.

6:45Always thinking about the lawyers who need to be taken care of. I mean, your empathy is just so profound sometimes. I'm always amazed. Grant me the confidence to ask for$5 billion as a lawyer because that's a lot. All right. The Supreme Court is sprinting toward its summer break. But before going on vacation, it has to issue dozens of rulings, including a decision yesterday in the most consequential abortion case since Roe v. Wade was overturned two years ago. The judges delivered a big win to abortion rights advocates by blocking a challenge to the abortion medication Mifepristone, preserving access to a drug used in more than 60 percent of U.S.

7:23abortions. The challenge to Mifepristone was brought by conservative doctors who argued that the FDA sidestepped the typical process when it approved the pill back in 2000 and didn't consider safety concerns when it removed more restrictions on the drug in 2016 and 2021. The FDA countered that the pill is overwhelmingly safe, even more so than Tylenol, and was backed by hundreds of pharma companies who worried that the case would gut the FDA's authority, put their own drugs up to a legal challenge. But in their decision yesterday, the justices didn't even weigh in on the FDA's power because the case didn't even get that far.

7:57Instead, SCOTUS ruled on a procedural matter, saying the doctors didn't have grounds to bring the case in the first place because they were not directly harmed by the availability of mifepristone. Toby, we and everyone else have been following the twists and turns of this case for the better part of a few years, a significant decision from the Supreme Court. Right. Absolutely. And part of the Supreme Court's decision centered on the fact that just because a group desires to make a drug less available or to ban a drug does not actually give it standing to sue on that. So under the Constitution, you can't just not like a drug and then restrict others from accessing it.

8:32and especially if you cannot prove that you had to act in a way that like went against your conscious there's a there's a law called the conscious laws federal conscious laws which allow doctors to be protected under things that they think act against their conscious and that didn't come into to play in this particular case so you're right lots of twists and turns but even if it was a procedural ruling even if it was a ruling on the fda itself the the general bottom line here is that abortion, there was another win for abortion rights. Right. So medication abortion, Mifepristone will stay on the market for now.

9:07But you'd think that pro-abortion people would be celebrating super jubilant and that people against abortion would be so dejected and saying, oh, where are we going to go from here? But actually there's a lot more nuance because the Supreme Court didn't rule on the merits of the FDA's authority and whether it should approve this in the first place in 2000. They just ruled on this procedural matter of whether they had a right to sue in the first place. So this thing is going to keep going on because there are three Republican states attorneys general from Idaho, Missouri and Kansas that say they do have grounds to stand on because they're saying that they incur additional health care costs to treat women who have suffered some side effects from taking Mifepristone.

9:46So they're saying we do we have been harmed. This isn't a case like the other conservative doctors have put forward. So they are going to pursue this case. So this thing is going to continue going on. So I think a lot of pro-abortion people who are rejoicing from this say, look, this is not over at all. Meanwhile, the Supreme Court had another case to rule on. It's another big business case, and they sided with Starbucks in its clash with unionizing workers. This case centered around the so-called Memphis Seven, seven Starbucks employees who say they were fired for their unionization efforts in 2022, which set up a legal clash between the National Labor Relations Board and the company.

10:23And this is very complex, but the upshot of the Supreme Court's ruling is that the National Labor Relations Board can no longer get workers allegedly fired over a union to put back in their positions through an expedited court order as it could in the past. The board now has to go through the same process as everyone else. So this is a win for Starbucks and other corporations. Yeah, it's a blow to unionization efforts across the country because it now sets a higher board for the NLRB to get those injunctions granted, get those workers to continue working while the legal system kind of goes through its gears.

10:58So it is, again, very, very complex. But the bottom line here is that it's a blow to unionization efforts in the country. This morning, I want you all to get in touch with your emotions because Inside Out 2 hits theaters today. And as our now teenage protagonist Riley confronts realities of life filled with joy, sadness, anger, fear, disgust, and more, Pixar executives will be doing the exact same thing. It's been a rough stretch for the vaunted animation studio. In June of last year, Elemental had the worst opening box office numbers in company history. And no movie from either Pixar or Walt Disney Animation has generated more than$480 million at the box office since 2019.

11:39a far cry from the billion dollar hauls of Incredibles 2 and Toy Story 4 from years past which brings us back to Inside Out 2. Pixar is hoping a sequel heavy strategy relying on beloved and proven IP might be the strategy that can turn things around at the box office. Neil is this movie going to be the one to shake Pixar out of its funk? It's kind of sad that it's like Pixar is doing this all this soul searching and they're like, all right, well, the thing we need is more sequels and spinoffs of existing IP. It's kind of where we're at. But they've tried these original stories like Luca, like Soul, Turning Red, Elemental, and those have just not resonated with audiences.

12:20And the head of Pixar said that he wants to move away from directors sort of doing this catharsis with these movies and telling their own stories and getting back to those more universal stories that were so beloved, like Monsters, Inc. and Toy Story. I mean, every kid thinks that there's a monster in the closet. Every kid thinks that their toys come alive when they leave the house. And so this guy wants to get back to telling those more universal stories rather than individualistic type origin stories that directors might want to say, oh, I want to tell this story of my particular life. So that's their strategy is to get back to this more mass appeal kind of things that works so well for Toy Story and Monsters, Inc.

12:59It makes me sad, though, because that strategy is dangerously close to yielding you a company and a suite of content that doesn't ever get you to those great originals. It doesn't get you the Incredibles, the Finding Nemo's of the world. Those require risks. Those require not just rebooting and doing sequels. So I don't know. I know what the numbers say. You look at Toy Story 4 making a billion dollars. You look at Finding Dora. You look at Incredibles 2 bringing in these huge box office halls. And of course, like the math would say, just reboot old IP. And Inside Out was, some people consider it like the last great Pixar movie.

13:36It came out in 2015. So I can see the temptation here. And early reports are the movie is good. So you shouldn't sleep on it. But it does make me sad. It brings a tear to my eye because it feels like Pixar has lost its way. And I'm not sure this is the right path for it to find its way back. All right. So Inside Out 2, it's coming to theaters. There hasn't been a$100 million opening weekend for the box office this year. the box office is doing terribly this year. What's your number? Over or under 90.5 million. I think it's expected to be in that 85 to 90 million range. So I do think it's going to be under just because I don't know.

14:11Well, you know what? I'm an optimist. I'm going to change right now because maybe we've just been crying out for a good summer movie, a good family-friendly movie. And I mean, I remember crying at the original Inside Out. So I think people will have that emotions. Probably a lot of the people who saw the original ones are now parents themselves. So I'm going over. We're hitting 100 million? Yeah, I think 100 million because, yeah, I mean, it sounds good. We're introducing new characters here. You got envy, got anxiety getting into the mix. So I think we're back to telling those universal stories that a lot of people can relate to.

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16:23The weekend is almost here, and you want to know how I sense that? Because it's time for Stock of the Week, Dog of the Week, the Friday segment where Toby and I pick one stock that rang majestically like a G major chord and another that was more dissonant than a C-sharp minor 9 over E. Toby, you won the pre-show lawn mowing in a straight line competition, so you get to go first. My stock of the week is none other than Apple. Apple heard you. Your iPhones are all the same. Sales are dropping in China. You have no AI plans. Why does my left AirPod not charge at the same rate as my right one? It heard you, and it took that personally, roaring back this week to retake its throne as the most valuable company in the world.

17:05It turned out to be AI that gave it the boost it needed. AI, or as Apple calls it, Apple Intelligence, was the win behind its sales this week as its developer conference laid out how it plans to integrate the new tech into its product offerings. The market liked what it saw with a more powerful Siri in a deal with open AI headlining its AI ambitions. Neil, Apple gained 10 % so far this week, and its market cap is now up to$3.29 trillion. Does it have its swagger back? Well, the idea here is it's only gaining market cap because investors think that it's going to sell more iPhones. currently 270 million iPhones have not been upgraded in more than four years.

17:46And that's 270 million out of 1.5 billion. I'm doing the math in my head right now. Nearly 20 % of all iPhones in existence have not been upgraded in more than four years. They think that like you said, you did say on the, on the podcast, when we were talking about this, you were like, I'm looking at all of the AI features that are in iPhones. Now the ability to summarize documents, to pull things from emails, to generate images, all of the things that we know and love about AI and it's coming straight to your iPhone. It's like the first time you can really interact with it on a consumer device in a very easy way.

18:16Investors really like that. And they think it's going to drive the next so-called super cycle of iPhone sales where people are going to start upgrading in mass to get these new features. Yeah. I think what Apple did this week was prove that AI can be a feature. It doesn't have to be a product itself. Other tech companies want to sell you their chatbots, sell you maybe even their hardware with powered by an LLM, but Apple showed the value of just integrating AI into an already existing consumer product. We all have iPhones in our pockets already rather than going for this standalone holistic app or device.

18:47So they really did put the fear of God into a lot of AI companies and also kind of, I mean, I've said the swagger like four times already on this podcast, but I do think it showed that Apple still has its mojo and it still has the ability to inject new, generally new technology into its products, which is something that a lot of people have felt like they've been lacking recently. Meanwhile, the big question around this was who is paying who over the Apple-ChatGPT partnership? ChatGPT is coming to Siri when Siri doesn't know an answer. It's going to TapChatGPT. The big question in tech circles was who is paying, like who is making money from this?

19:24What's going on here? Because Google pays Apple nearly$20 billion a year to put search on its iPhones. So is ChatGPT doing the same thing? Well, we found out from Bloomberg that no one's paying anybody. It's a completely, you know, handshake partnership where ChatGPT, OpenAI is getting all of Apple's distribution and Apple gets ChatGPT's tech. But I don't know if this is a good deal for OpenAI or ChatGPT because they're not getting any money for this and they're going to have to pay every single time someone uses ChatGPT in computing power. Maybe down the line, they'll do a rev share. If you buy ChatGPT Plus or some subscription to ChatGPT through the iPhone, then they'll both make money.

20:02But for right now, this is kind of a sour deal for ChatGPT. They're literally treating, Apple is treating OpenAI like a summer intern and paying them through exposure, which is just a wild thing to think about. All right. My dog of the week is Nathan's Famous, which, yes, is a public company. Its stock was down a nudge this week as the brand trudges through a minor PR crisis over Joey Chestnut not being able to compete in the 4th of July hot dog eating contest. To recap the debacle, the 16-time champ was banned from the event because he breached a hot dog exclusivity provision. Yes, I said that with a mostly straight face.

20:36Apparently, Joey signed a sponsorship deal with plant-based meat company Impossible Foods, which Nathan's considers a rival. And Nathan's won't let him rep Impossible during their competition. You can understand where they're coming from. They compared it to Michael Jordan asking Nike if he could wear Adidas shoes during the NBA finals. It's just a non-starter. Why would they allow that? But to make matters worse for Nathan's Major League Eating, ESPN, anyone with a stake in the Coney Island festivities, Netflix entered the chat and announced a live head-to-head dogfight between Joey Chestnut and his fiercest rival, Takeru Kobayashi, to be streamed on Labor Day.

21:13Toby, hard to think of a worse chain of events for Nathan's, even if they technically did nothing wrong. You lose the only reason anyone watches your marquee event, then you quickly get upstage by another competition. Yeah, shout out Netflix and all this, by the way, because they could have been our stock of the week just how fast that they jumped on this and put together this event. There is beef everywhere you look down at this entire saga because you have beef between Joey Chestnut and Major League Eating, Joey Chestnut and the Nathan's famous hot dog eating contest. Then you also have beef from Kobayashi dating way back to 2009 when he was banned from Major League Eating over contract disputes.

21:53and then you have like this Netflix beef with blah blah blah it is crazy there's so many different I mean you use the word links to each other because we're doing sausage metaphors at this point but yeah there is there's beef all the way down New York City Mayor Eric Adams also chained in saying that he wants Major League Eating to come to a deal and give Joey Chestnut a chance to defend his title once again so everyone's weighing in with opinions here. Meanwhile Kobayashi has not competed since 2009 in a Netflix documentary that came out last month he said I no longer feel hunger. So I don't know if that's metaphorical or not.

22:27So it'll be very interesting to see because he was, when I was growing up, he was the guy. And then Joey Chestnut came afterwards. So this competition is going to be very interesting. Labor Day does not have the same ring to it as 4th of July. But I think there's a lot of questions around how many dogs can this guy possibly eat? Yeah, last time they faced off, Joey ate 68 dogs. This was in 2009 to Kobayashi's 64 and a half dogs. That half dog is really important there. I think Joey's just going to wipe the floor with him, right? Joey's still in his prime. He's feeling good. He ate 76 dogs a few years ago.

22:58I don't think Kobayashi has what it takes to go mouth-to-mouth with him. I don't know about that one. It's Friday. It's summer. The weekend is beckoning. So we at Morning Brew Daily, don't blame you if you take it a little easy at work today. But don't push the envelope too far or you'll end up like the dozens of employees at Wells Fargo that were fired last month after an investigation found that they were faking work. How do you fake work? Well, in days gone by, it might mean an extra long session in the bathroom or an extended lunch break. But in the work-from-home era, technology has made slacking off easier than ever.

23:31Wells Fargo found that employees on the wealth and investment management teams were using devices that simulated keyboard activity, creating the impression of active work. These are devices like mouse jigglers that lazily move your mouse around the screen so it looks like you're active online, even though it's a$20 device from Amazon at the helm, keeping your Microsoft Teams status green. Neil, these devices took off during the pandemic and it looks like they're still popular to this day. They've gotta be still around. I mean, since COVID started, we've been watching this extended Tom and Jerry episode of employees trying to skirt doing work at home and then employers installing software and surveillance technologies to try to stop them from doing that.