“Wait Is This the Twitter Trial?”

After sleeping at Twitter HQ over the past week, Elon Musk is moving back into his second home, the Hotel DuPont in Wilmington, DE. You have to wonder if he’s counting sheep at night wondering how twice in one season he got in front of no-nonsense Delaware Chancellor Kathaleen McCormick. The issue at hand in Delaware court is whether Musk was involved in his multibillion-dollar pay package. Plaintiff’s counsel, who don’t seem to mind the tenfold increase in Tesla’s stock, argued that the Board failed to exercise independence and rewarded Musk a mega pay package.  

 

Some experts say he has a better case than the Twitter deal, in part because shareholders typically can’t challenge executive compensation due to courts deferring to the judgment of directors. But Musk himself admits he made multiple decisions without board approval.  Matt Levine opines that “Tesla shareholders seem to think that Musk runs his companies like personal playthings rather than acting as a loyal fiduciary.”   

 

Onto a former tech billionaire, wondering how bad the governance around Sam Bankman-Fried’s FTX is? Apparently worse than Enron, here are some hard-to-believe examples which might just be the tip of the iceberg. Sequoia Capital and SoftBank are among a list of notable investors who threw nearly $2 billion at FTX. Diligence? A Board seat? Even a banker deck would do compared to the childish documentation spilling out of FTX. When you make Adam Neumann look conservative, it’s bad governance.

 

Our newsletter will be off next week ahead of the holiday.

 

Have a great Thanksgiving,

GPP Team

FEATURED ARTICLES

New York Times: Elon Musk Tells a Court He Had Little Say in His Giant Tesla Pay 

Tesla CEO Elon Musk testified in a Delaware court that he had no role in the company’s Board approving a pay package in 2018, granting him the right to acquire $50B in Tesla stock options. Read More 

Bloomberg: Musk Claims No Role in Setting His $55 Billion Pay Deal at Tesla 

In his latest foray into the Delaware court system, a lawsuit now alleges Musk’s compensation was inflated. Read More 

The Wall Street Journal: New CEO Says FTX Suffered 'Complete Failure of Corporate Controls' 

John J. Ray, who has helped companies navigate some of the biggest bankruptcies of all time, claimed in a filing that the mismanagement and array of abuses at FTX are the worst he has ever seen. Read More 

ADDITIONAL READINGS & LISTENINGS 

Harvard Law School Forum on Corporate Governance: How Twitter Pushed its Stakeholders Under the (Musk) Bus 

While Elon Musk’s acquisition of Twitter resulted in significant financial wins for the company’s shareholders, Harvard Law School Professors Anna Toniolo, Kobi Kastiel and Lucian Bebchuk argue that parties with no ownership but still a vested interest in the company were negatively affected. Read More 

Axios Pro: Deal Advisers Forecast Cloudy Skies Ahead 

While dealmaking isn’t entirely impossible, reports Mike Flaherty, a Berkeley Forum on Corporate Governance panel reiterated the necessity for patience and creativity given the current macroeconomic environment. Read More 

The Deal: Jana, Elliott, Legion, Sachem Reveal New Stakes 

Ron Orol reports on the most significant new stakes that top activist investors reported in the most recent slate of 13F filings including Jana, Elliott, Sachem Head and Legion. Read More

CLS Blue Sky Blog: Social Washing or Credible Communication? 

In a new paper, law professors Nathan Goldman of North Carolina State University and Yuan Zhang of the University of Texas at Dallas examine whether or not companies that include DEI disclosures in their 10-K filings are more likely to execute on their DEI commitments to employees. Read More

Morrow Sodali's Quarterly Activist Ownership Analysis 

Morrow Sodali published its Q3 Activist Report highlighting major trends amongst global activist campaigns. Read More 

The Wall Street Journal: SEC Had a Record Year for Enforcement Actions 

Mengqi Sun reports on the SEC's fiscal year which saw a record number of whistleblower tips, and awarded over $6.4bn in fines. However, questions still linger as to whether the SEC will double down its enforcement efforts against senior executives and managers going forward. Read More  

ESG NEWS

The Economist: The Tenacity of ESG Investing 

The backdrop of today’s macroeconomic challenges serve as a stark reminder of our reliance on fossil fuels, The Economist argues. ESG has become less about solving for the environmental challenges and more about greenwashing and scandal in 2022. Read More

Harvard Business Review: Startups Need an ESG Strategy 

Bruce Simpson and Cait Brumme argue that startups have a unique opportunity to embed ESG principals into their company from their genesis through purpose, risk management, a natural resource footprint and many other ESG characteristics. Read More 

Reuters: ESG Enforcement Is on the Rise: Are You Ready? 

This enforcement is a compelling reason for companies to closely examine their ESG reporting to ensure accurate information, write Kelly Gibson, Michael Hacker and Liz Goldberg. Read More 

FROM OUR DESK TO YOURS


Our team had a big roster of events around the city this week leading up to Thanksgiving. GPPers had the opportunity to attend a fireside chat with IBM CEO Arvind Krishna at the Economic Club of New York, the Judge Learned Hand award ceremony at the American Jewish Committee honoring Gibson Dunn Chair Barbara Becker, and the Committee to Project Journalists’ annual International Press Freedom Awards and benefit dinner. Some of us also got schooled at the Council of Institutional Investors’ Annual Corporate Governance Bootcamp at NYU Law School.

 

If you’re looking for a good TV show after filling up on turkey and mashed potatoes, try a new GPP favorite, Bad Sisters. Set in Dublin, the story follows the tight-knit Garvey sisters. When their brother-in-law winds up dead, his life insurers launch an investigation into the sisters and explores the many motives they may have had in his mysterious death. Let’s just say among the lessons is discretion and teamwork.

 

Also, in the spirit of the upcoming holiday we wanted to provide a spoof on one of our favorite comms documents, the rollout, that we hope will help you get into the Thanksgiving mindset.  


  • 6:00 AM – Put Turkey in Oven 

 

  • 9:00 AM – The Great American Bakeoff begins  


  • 10:00 AM – Watch Thanksgiving Day parade, pray for no wind for balloon-handlers  


  • 12:00 PM – Debate staying in pajamas or getting dressed for the holiday  


  • 3:00 PM – Mentally prepare for family reunion  


  • 5:00 PM – The “SuperBowl of eating” begins  


  • 6:00 PM – Regret going back for seconds  


  • 8:00 PM – Strategize for Black Friday 

PEOPLE MOVES


  • Nelson Peltz has stepped down from Janus Henderson’s Board of Directors. John Cassaday will succeed Gillingwater as Chair and Brian Baldwin, Partner and Senior Analyst at Trian, has been appointed as Independent Non-Executive Director, to succeed Peltz. Read More  


  • Axios Political Reporter Jonathan Swan, who gained a name for himself through rigorous White House reporting and several high-profile broadcast interviews, including with former President Trump, will join The New York Times as a political reporter covering Republicans in Congress beginning in January. Read More  


  • Gina Heeb will join The Wall Street Journal as a Consumer Finance and Banking Reporter. She was previously writing for Bloomberg and The New York Times. Read More  


  • Protocol, a digital publication focused on technology, business and public policy, is ceasing operations after three years. Read More 


UPCOMING EVENTS

November 30, 2022: DealBook Summit  

December 7, 2022: Bloomberg Sustainable Business Summit 

December 13-14, 2022: Yale CEO Summit 

Let us know if you have any comments or suggestions for our newsletter format.
Follow us on Twitter @GladstonePlace
Please feel free to forward this along.
Subscribe
Gladstone Place Partners | (212) 230-5930 | gladstoneplace.com
STAY CONNECTED
Facebook  Twitter  Linkedin