Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. He's a money stuff guy. Yeah,
Speaker 1: it'll be great.
Speaker 2: Hello, and welcome to the Money Stuff Podcast. Here weekly
Speaker 2: podcast where we talk about stuff related to money and
Speaker 2: Elon Musk. I'm Matt Levian and I are at the
Speaker 2: Moneystuff column for Bloomberg Opens and.
Speaker 1: I'm Katie Greifeld. I'm a reporter for Bloomberg News and
Speaker 1: an anchor for Bloomberg Television.
Speaker 2: What are you talking about today, Katie?
Speaker 1: Okay, we're obviously talking about Elon Musk and the results
Speaker 1: of the shareholder vote, the two prong issues there.
Speaker 3: We're going to talk about.
Speaker 1: An extremely messy deal.
Speaker 3: We're talking about the Paramount.
Speaker 1: Skydance deal, and then we're going to talk about mouse
Speaker 1: jigglers and Wells Fargo and getting fired.
Speaker 2: Sounds great. He is a money stuff guy.
Speaker 3: It's Friday morning in America.
Speaker 2: Elon Musk has gotten his money. He has, I mean
Speaker 2: sort of. He had the vote for his money. Did
Speaker 2: he get his money? Complicated question?
Speaker 3: Yeah, TBD on that point.
Speaker 1: So the shareholder vote happened for for Tesla, and I
Speaker 1: think it was I think this is the most boring
Speaker 1: outcome actually, So they.
Speaker 2: Had to vote on two things right. One is should
Speaker 2: Helen Musk get his money? And the other was should
Speaker 2: they reincorporate to Texas? Right. If they voted against them
Speaker 2: getting his money, that would have been like some real fireworks,
Speaker 2: like amazing if you have quit in a huff last night,
Speaker 2: who knows. But they voted in favor of him getting
Speaker 2: his money, so he's going to stay. And then I
Speaker 2: sort of thought they would vote against moving to Texas
Speaker 2: because my impression was that institutional shareholders like the predictability
Speaker 2: and protections of Delaware law, and that Elon Musk being
Speaker 2: kind of a whimsical dude, they thought it would be
Speaker 2: nice to have a court that would rain him in.
Speaker 2: But no more shareholders voted to move to Texas than
Speaker 2: voted for his pay.
Speaker 1: Yeah, and I mean and seventy two percent voted for
Speaker 1: his pay, So the support for the movie to Texas
Speaker 1: was broad.
Speaker 2: Yeah. So this is all driven by the fact that
Speaker 2: earlier this year a Delaware court struck down that twenty
Speaker 2: eighteen pay package that he got. Right, So in twenty eighteen,
Speaker 2: Tesla gave him a bunch of options that if he
Speaker 2: hit some very ambitious milestones, he'd get you know, fifty
Speaker 2: six billion dollars. He hit all the milestones, he got
Speaker 2: all the options. A shareholder sued, saying that like the
Speaker 2: process of paying him was too conflicted, And earlier this year,
Speaker 2: a Delaware court said, we agree, we're taking back the options.
Speaker 2: And so Tesla is voting to give him back the
Speaker 2: options and to get out of Delaware because they don't
Speaker 2: like that. And I remember when I wrote about the
Speaker 2: court decision earlier this year, I was like, this seems
Speaker 2: kind of wrong, right, Like I'm not like a you know,
Speaker 2: devoted Elon Musk fan here, but like the shareholders voted
Speaker 2: to give him the money. The court decided that the
Speaker 2: vote wasn't fully informed, but it was pretty informed, like
Speaker 2: they knew how much money they were giving him, and
Speaker 2: like what the targets were, and he hit the targets
Speaker 2: and they were happy. So it struck me as kind
Speaker 2: of a weird decision. It might have been in the law,
Speaker 2: but it was protective of shareholders in a way that
Speaker 2: like the shareholders clearly didn't want, right, Like, the shareholders
Speaker 2: got the benefit of their bargain, which was Elon Musk
Speaker 2: took the company to six hundred and fifty billion dollars,
Speaker 2: and this court decision seemed to kind of interfere in
Speaker 2: the relationship between the company and its shareholders. And I
Speaker 2: think that's what the vote last night says, right, like,
Speaker 2: not only did the shareholders vote to bring back the
Speaker 2: pay bagage, but they also said, yeah, we think that,
Speaker 2: like this Delaware decision was wrong and we now reject
Speaker 2: Delaware law, which I think is kind of an interesting outcome, right, Like, Yeah,
Speaker 2: Tessa is a weird company. It's got a weird CEO
Speaker 2: and a weird relationship with him, and it's got a
Speaker 2: lot of retail shareholders who are maybe more inclined to
Speaker 2: vote for like a populace to move to Texas than
Speaker 2: like the average institutional shareholders. But a lot of institutional
Speaker 2: shareholders voted to move to Texas, and like iss the
Speaker 2: proxy advisor said, yeah, you should vote to move to Texas.
Speaker 2: So I'm interested to see going forward, will other companies
Speaker 2: copy this, because like I would have thought that a
Speaker 2: lot of companies would say, I would like to have
Speaker 2: a little bit less shareholder protection and a little bit
Speaker 2: more freehand for the board and the CEO. But if
Speaker 2: I actually try to do that, my shareholders will say no. No,
Speaker 2: we want the protections. We see you trying to get
Speaker 2: away from a sort of strict corporate law, and we're
Speaker 2: going to vote against that. But now the shareolders votedn't
Speaker 2: for it at Tesla. I don't know are other companies
Speaker 2: going to follow along.
Speaker 1: I mean, it'll be interesting to see what this means
Speaker 1: for Texas. Obviously, the business courts in Delaware are extremely
Speaker 1: well established. Comparatively, Texas is not exactly there, so I
Speaker 1: don't know. Maybe we'll get some precedents sent there. But
Speaker 1: I mean, you made the point in your sort of
Speaker 1: walk up column that if you think about the reasons
Speaker 1: why the twenty eighteen pay package was voided by that
Speaker 1: Delaware judge, there was this idea that the conflicts of
Speaker 1: interest in the board and other details weren't properly disclosed
Speaker 1: and well known. And I feel like with this vote,
Speaker 1: obviously everything's out in the open.
Speaker 2: So I think that I read yesterday is that, like,
Speaker 2: so the judge found that in twenty eighteen the board
Speaker 2: was sort of in the pocket of Elon Musk, and
Speaker 2: the proxy didn't fully disclose all of that, right, and
Speaker 2: so this this year, this vote, the proxy just discloses
Speaker 2: the judge's entire opinion, like it's attached to the back.
Speaker 2: So if you're interested to know what conflicts you know,
Speaker 2: were involved in the twenty eighteen decision to pay Elon Musk,
Speaker 2: you can go read the opinion and get like all
Speaker 2: of the like the worst case for the conflicts. But
Speaker 2: I mean the point yesterday that there are new conflicts, right,
Speaker 2: there's all this stuff about Elon doing AI at other companies,
Speaker 2: if at his other companies, if he doesn't get his
Speaker 2: money at Tesla. Earlier this year, Elan Musk asking for
Speaker 2: another pay package. This is back when he still had
Speaker 2: these options before the judge took them away. He asked
Speaker 2: for another big pay package to get his stock ownership
Speaker 2: up at Tesla, and he said, if I don't get
Speaker 2: another big pay package, I won't be able to build
Speaker 2: AI at Tesla. There's that reporting about how there were
Speaker 2: like some in Vidio chips that were ear marked for
Speaker 2: Tesla that he called up in video and said no,
Speaker 2: that sent them to X and said is you know Twitter.
Speaker 2: So there's all this stuff about his conflicts of interest,
Speaker 2: his threats, his like you know, demands for new compensation.
Speaker 2: All this stuff is not really addressed in the in
Speaker 2: the current Tesla proxy and like, I don't know. If
Speaker 2: I were a disgruntled shareholder, I'd be writing another lot
Speaker 2: suit being like, well there's more stuff you didn't disclose.
Speaker 2: But that said, like you know, as I said, like,
Speaker 2: I think that the meaning of last night's vote is
Speaker 2: that Delaware's interference here is wrong and not what shareholders
Speaker 2: want and not what is good for shareholders.
Speaker 1: So I do wonder what was on the mind of
Speaker 1: the large retail shareholder base. Not to speak of them
Speaker 1: all as a monolist, but I mean, in many ways,
Speaker 1: this was just seen as a referendum on Musk and
Speaker 1: his leadership of the company.
Speaker 3: And the point has been made.
Speaker 1: It's very well known that the retail shareholders of Tesla
Speaker 1: love Elon Musk. They're there because they love Elon Musk.
Speaker 2: Tesla has a much more retail shareholder based than a
Speaker 2: lot of companies, but like almost half institutional, and those
Speaker 2: people voted pretty strongly in favor of moving to Texas
Speaker 2: and also in favor of the pay more for Texas
Speaker 2: than for the pey. It's an impressive outcome for him.
Speaker 2: A month ago, like he was clearly focused on his
Speaker 2: AI stuff at other companies, and five months ago he
Speaker 2: was asking for more money from Tesla. I wonder if
Speaker 2: this traumatic experience has brought them closer together so that
Speaker 2: now he will spend more time on Tesla and not
Speaker 2: demand more money, or if it's like after winning the
Speaker 2: vote this week, he will go back to messing around
Speaker 2: with Xai and ignoring Tesla. I don't know. I don't know.
Speaker 1: I kind of lean towards the ladder, but what do
Speaker 1: I know?
Speaker 3: But I will say.
Speaker 2: Too, he's a short attention spatter. I think he's going
Speaker 2: to go do something else next week.
Speaker 1: Yeah, that's a very strong bare case like that doesn't
Speaker 1: even though we're past the vote, seventy two percent voted
Speaker 1: for the pay package, it doesn't fix the problem of
Speaker 1: Musk is distracted. It seems like he has more fun
Speaker 1: things going on than Tesla struggles right now, and you've
Speaker 1: seen all of these big.
Speaker 3: Tesla bulls come out.
Speaker 1: I'm thinking about Dan Ives at Webbush saying this removes
Speaker 1: a huge overhang for the stock, Tesla market cap to
Speaker 1: a trillion dollars. I don't necessarily know if that's the case.
Speaker 2: I don't think Elon being distracted is necessarily a bare case.
Speaker 2: I think the counter argument is space Ax, where he
Speaker 2: doesn't seem to have a ton of day to day involvement.
Speaker 2: There's a professional team running it and it's very successful.
Speaker 2: But also it's got the Elon Musk halo, which helps
Speaker 2: it like raise money and sort of be high profile.
Speaker 2: You could tell a similar story about a Tesla where
Speaker 2: like some team of managers run it as a competent
Speaker 2: car company without doing weird stuff, and Elon Musk remains
Speaker 2: the CEO and biggest shareholder and sort of figurehead, such
Speaker 2: that it has a high stock market valuation and can
Speaker 2: raise money from retail investors and it's just like always
Speaker 2: in the news. That's not the worst outcome for Tesla.
Speaker 2: I don't think. I don't know that having him in
Speaker 2: the day to day design process for the cars is
Speaker 2: super additive. Like I don't know, everyone seems to think
Speaker 2: the cyber truck is really ugly and that's clearly his baby,
Speaker 2: So maybe like a distracted but happy Elon is the
Speaker 2: kind of best outcome for Tesla.
Speaker 1: Maybe I'm just thinking about again, like the fundamentals of
Speaker 1: the EV industry right now, it feels like every single
Speaker 1: automaker has I'm exaggerating, but has skilled back EV production.
Speaker 1: There's this big leading into high where it seems like
Speaker 1: the American driver is also going. Tesla's never going to
Speaker 1: make a hybrid. Maybe I'll be proven wrong.
Speaker 2: But it's not. With Elon paying more attention to it
Speaker 2: is not going to make it make a hybrid.
Speaker 1: True, true, I don't know. I mean SpaceX is a
Speaker 1: good example, a good counterweight, because it seems like cracking
Speaker 1: the private space industry would be harder than cracking the
Speaker 1: EV industry. So and SpaceX did that, so maybe maybe
Speaker 1: things will.
Speaker 3: Be fine at Tesla.
Speaker 1: I guess the point that I'm making is that I've
Speaker 1: interviewed all of these automaker chief executives.
Speaker 3: I'm talking to the Kia.
Speaker 1: COO in like two hours. Like the EV market is
Speaker 1: in a storm right now.
Speaker 2: Yeah, Like the governance is sort of like unrelated to
Speaker 2: that much. Elon Musk is not going to fix the
Speaker 2: EV market. And I don't know. I mean, like you
Speaker 2: can tell the story that like the EV market is
Speaker 2: in America is partly politicized, and like that slows down
Speaker 2: adoption and Elon Musk could help you know deeput it
Speaker 2: hiss has EV adoption or politicize it the other way.
Speaker 2: But I don't know, I don't really see that, Like
Speaker 2: I just I think that at this point, Tesla the
Speaker 2: company faces the same headwinds as every other you know,
Speaker 2: EV manufacturer, except that it is only an EV manufacturer,
Speaker 2: And Tesla the stock has just the sort of vague
Speaker 2: halo effect of like it's the one public way to
Speaker 2: invest in Elon Musk, and so it trades at a
Speaker 2: premium because if you like Elon Musk's whole stick, and
Speaker 2: you don't care much about EV's, but you're just like,
Speaker 2: how do I buy like the Elon Musk thing? The
Speaker 2: only way to do it as a public investor is
Speaker 2: to buy Tesla stock, And so it trades on that.
Speaker 2: And you know what particular parts of the Elon Musk
Speaker 2: empire are conducted in Tesla as opposed to at his
Speaker 2: private companies, Like doesn't necessarily matter that much for the
Speaker 2: for the price of the stock.
Speaker 1: I'm more thinking of, like not him making good decisions
Speaker 1: for Tesla, but him stopping good decisions that could be
Speaker 1: made at Tesla. Like you think about him, what firing
Speaker 1: the Supercharger team and then rehiring a bunch of them
Speaker 1: that wasn't great, Like wavering on plans for a much
Speaker 1: cheaper ev model that wasn't great. That did shake a
Speaker 1: lot of even the biggest Tesla bowls conviction in the stock.
Speaker 1: And then I don't know, the Robotaxi dreams seemed to
Speaker 1: be and the cyber truck too seemed to be like
Speaker 1: an expensive waste of money.
Speaker 2: We could have done this on yesterday, is the.
Speaker 3: Thing, like, yeah, we probably should have.
Speaker 2: We thought that there would be like late breaking news,
Speaker 2: but in fact there was early breaking news, and then
Speaker 2: it turned out to be true. By the way, I
Speaker 2: would have been so excited, like the outcome, I was
Speaker 2: really rooting for it. Once he tweeted yesterday Thursday. Once
Speaker 2: he tweeted on Thursday that that he had won the vote,
Speaker 2: obviously the outcome I was reading for is that he
Speaker 2: had lost the vote. I was gonna get sued, but
Speaker 2: didn't come to pass. The tweet was true.
Speaker 4: That would have fit delicious.
Speaker 1: And now we're back from the ad break we heard
Speaker 1: from our future selves. I think I said last week
Speaker 1: that we're really learning that time is a concept, and
Speaker 1: we're doing that again because now it's you and I
Speaker 1: talking on a Thursday afternoon.
Speaker 2: We have traveled back in time to Thursday afternoon. It
Speaker 2: was nice Thursday after Again, here we.
Speaker 3: Are and we traveled back in time.
Speaker 1: Yeah, why live in a Friday when you can live
Speaker 1: in a perpetual Thursday.
Speaker 2: So it's the this podcast.
Speaker 1: Absolutely let's talk about sky Dance and Paramount and the
Speaker 1: deal that will never.
Speaker 3: Be question Mark.
Speaker 2: It's pretty wild.
Speaker 1: Yeah, we have talked about it once on this I
Speaker 1: forget what we said, but now we're sort of talking
Speaker 1: about we're talking about it's obituary because no, not yet,
Speaker 1: at least, this deal's obituary because National Amusement read Sherry
Speaker 1: Redstone stopped the deal.
Speaker 3: It's not going to happen with sky Dance at least.
Speaker 2: Yeah. I love it. I love it. It's such a
Speaker 2: complicated deal because of a very simple thing, which is
Speaker 2: that so jarriets that Amusements. National Amusements owns some movie
Speaker 2: theaters and also a block of Paramount stock. Paramount is
Speaker 2: like an eight billion dollar public company has a lot
Speaker 2: of interesting, you know, TV and movie assets, and people
Speaker 2: want to buy it, and Shari Redstone, who inherited it
Speaker 2: from her father, seems to want to sell it. Although
Speaker 2: no one's really sure. And the thing about National Amusements
Speaker 2: is that it owns around five percent of Paramount's stock,
Speaker 2: but it owns most of the voting stock. Most of
Speaker 2: the Paramount stock doesn't vote, so Shary Redstone, although she
Speaker 2: has like a fairly small economic interest in Paramount, has
Speaker 2: voting control of her Paramount. So that means anyone who
Speaker 2: wants to buy Paramount has to get her approval because
Speaker 2: she controls the vote even though she doesn't have that
Speaker 2: much stock. But it also means that like anyone who
Speaker 2: wants to deal with her, you know, has to pay
Speaker 2: her off at a premium. And then the rest of
Speaker 2: the Paramount shareholders, if they don't get the same deal,
Speaker 2: are going to complain. And that's the problem with doing
Speaker 2: a deal here. And it sort of looked like some
Speaker 2: I wanted to find a way to overcome that problem,
Speaker 2: and nobody did, and the di'll just fell apart.
Speaker 1: It fell apart really quickly too, And it is an
Speaker 1: incredible end because, first of all, this is something that
Speaker 1: Cherry Redstone originally was campaigning for for months, and Ellison
Speaker 1: and sky Dance did switch it around a lot and
Speaker 1: tried to make this work and revise their offer a
Speaker 1: bunch of times, and then just this week it fell apart,
Speaker 1: and there's been a lot of different reporting as to why.
Speaker 1: A lot of people familiar with the matter have commented
Speaker 1: on this to different outlets. The Wall Street Journal I
Speaker 1: found this explanation satisfying that basically they reported that she
Speaker 1: feared potential shareholder litigation over a deal that her critics
Speaker 1: said would disadvantage ordinary investors in Paramount. And this seems
Speaker 1: key legal fees that might eat into her family's fortune.
Speaker 1: That would make sense when you.
Speaker 2: Say she was advocating for this deal and then it
Speaker 2: fell apart really rapidly. I think that what happened is
Speaker 2: that originally Skydance to a shi Redstone and said, we
Speaker 2: want to do a deal with you where we give
Speaker 2: you money for National Amusements, and then we simultaneously negotiate
Speaker 2: a deal with Paramount so that like when we acquire
Speaker 2: National Amusements, we end up in control of Paramount and
Speaker 2: we can sort of do the merger that we want
Speaker 2: with Paramount. And Shah Redstone is, oh, yeah, it sounds good,
Speaker 2: and they offered to pay her a lot of money
Speaker 2: for her National Amusements take. But then over time, as
Speaker 2: they negotiated with the board. The Board of Paramount wanted
Speaker 2: more stuff for the regular public shareholders. Like they said,
Speaker 2: if you just give Shay Redstone all this money and
Speaker 2: don't give anything to the regular shaholders, one, that's going
Speaker 2: to look bad. It's going to be bad for our
Speaker 2: fiduciary duties as a board to protect the public shareolders.
Speaker 2: But then also like, we'll get sued. You'll get sued.
Speaker 2: Everyone gets sued. So what we need to do is
Speaker 2: strike a better deal for the public shareholders, and sky
Speaker 2: Dances like, sure, yeah, we can do that. We can
Speaker 2: take some of the money we're gonna give to the
Speaker 2: Shay Redstone and give it to the public shareholders instead,
Speaker 2: and then everyone will be happier, except that then Shah
Speaker 2: Redstone wasn't happier because they're taking money from her and
Speaker 2: giving it to the shareolders. So I think part of
Speaker 2: why the deal fell apart is because it's almost impossible
Speaker 2: to like just accomplish this, to like do a deal
Speaker 2: that is good for Shih Edstone and also doesn't get
Speaker 2: you sued by shareholders. And I think she eventually concluded
Speaker 2: that she was going to get sued by shaholders and
Speaker 2: it wasn't worth it. But also they did try to
Speaker 2: accomplish it, but that meant taking money away from her
Speaker 2: part of the deal, and that made her less inclined
Speaker 2: to do it. Right, if she was getting all the money,
Speaker 2: she could pay the legal fees. But if she's getting
Speaker 2: less of the money, then like ah, she's thills us
Speaker 2: to pay the legal fees. She doesn't want to do
Speaker 2: the deal.
Speaker 1: It almost feels like a Golden Shar's situation, which doesn't
Speaker 1: really exist in America, but it exists more formally in
Speaker 1: the UK and increasingly in China.
Speaker 4: And it just.
Speaker 1: Seems impossible to have good governance in this type of situation.
Speaker 2: This company has always sort of had famously bad governance.
Speaker 2: I mean, like, the situation is just bad governance, right,
Speaker 2: I mean, someone who inherited the company and has like
Speaker 2: a fairly small minority economic interest in it, but who
Speaker 2: has complete voting control and can can sort of block
Speaker 2: any deal she doesn't like is an unusual situation. And
Speaker 2: because it is a big public media company, it has
Speaker 2: like a fairly independent board of directors, or it has
Speaker 2: had fairly dependent board of directors sometimes who have gotten
Speaker 2: in fights with shire Redstone and have tried to like
Speaker 2: take away her voting control. And even now, you know,
Speaker 2: like I think the impression is that some members of
Speaker 2: the board were the ones sort of saying to Shay, like,
Speaker 2: this deal is not going to work. You're gonna get sued.
Speaker 2: It's not sufficiently you know, detective of minority shoulders. The
Speaker 2: other thing is like shire Redstone is worried about getting sued.
Speaker 2: One thing that could potentially help is like asking the
Speaker 2: other shareholders to vote to approve the deal. So most
Speaker 2: apparent Stock doesn't have any voting rights, and so it's
Speaker 2: just like, what if the board agrees to share, I
Speaker 2: can just share Redstone can just ratify. But she was
Speaker 2: thinking about conditioning the merger on the majority of the
Speaker 2: non voting shareholders, you know, holding a vote and having
Speaker 2: them vote to approve it, because then if they if
Speaker 2: they approve, that she'd be less likely to get sued.
Speaker 2: But my understanding is that Skidance didn't like that idea
Speaker 2: because they're like, you know, we're giving you this money,
Speaker 2: want to actually have a deal. We don't want to
Speaker 2: have to worry about the non voting shareholders turning it down.
Speaker 3: Well, they have to do something.
Speaker 1: This is a company in a struggling industry with enormous
Speaker 1: amounts of debt. But Matt, I have good news. The
Speaker 1: good news is that in a moment like this, when
Speaker 1: your searching eyes are looking for the CEO, the good
Speaker 1: news is that there's not one CEO. There's three CEOs
Speaker 1: in this situation.
Speaker 2: I think when we last talked about this situation said
Speaker 2: something like having three CEOs is really a sign that
Speaker 2: you're going to do a deal really soon, because you
Speaker 2: can't just run the company with three cos. But now
Speaker 2: here they are. I've got three CEOs.
Speaker 1: And I know I love it.
Speaker 2: There are some rivers that are going to replace those
Speaker 2: three CEOs with a fourth, different CEO, but he knows.
Speaker 1: Yeah, there's sort of this monolith just called the Office
Speaker 1: of the CEO, which is incredible and definitely at the
Speaker 1: time it was like, Okay, this is just a band aid,
Speaker 1: weird situation, holding pattern until a deal is done, and
Speaker 1: maybe it'll go back to being a more typical structure.
Speaker 1: But for right now, they have three CEOs and apparently
Speaker 1: it has a plan for going forward. The Office of
Speaker 1: the CEO. CNBC obtained a memo that they released on Wednesday,
Speaker 1: saying that they're going to remain open to exploring strategic
Speaker 1: alternatives that create value for shareholders. They also said that
Speaker 1: they're going to continue to focus on executing the strategic
Speaker 1: plan that they unveiled in the last couple weeks, so
Speaker 1: we'll see.
Speaker 2: I love them, they're fighting for their jobs.
Speaker 1: They're really fighting, but again, they need to do something.
Speaker 1: In one of the reports, there's just been so much
Speaker 1: on this, but apparently a special committee of directors recommended
Speaker 1: that Paramount could not continue as a standalone business. So
Speaker 1: something needs to get done here. And then Moody's was
Speaker 1: out this week warning and this was prior to the
Speaker 1: collapse that unless there's some sort of strategic transaction that
Speaker 1: comes along with cost cutting opportunities, basically they're going to
Speaker 1: get downgraded as well.
Speaker 2: Yeah, it's not a good situation. The impression I get
Speaker 2: is that this deal is pretty dead. There was another suitor,
Speaker 2: right Sony and Apollo. We're looking at the company, and
Speaker 2: the deal seems to have faded away because in part,
Speaker 2: I think because they were never really in with Sherry
Speaker 2: Redstone and she, you know, has the controlling vote. So
Speaker 2: it's a little unclear what happens next.
Speaker 1: And also in deal talk there's Edgar.
Speaker 2: Edgar who's like talking about buying National Amusements.
Speaker 4: I think, yeah.
Speaker 2: The impression that I get is that as this deal collapses,
Speaker 2: the next plan, besides like finding out who the CEO is,
Speaker 2: the next plan is for Shari Redstone to think about
Speaker 2: selling National Amusements is just like a single thing. So
Speaker 2: she would just sell National Amusements and then whoever buys
Speaker 2: it it would be their problem to deal with like
Speaker 2: the weird governance structure at Paramount and to try to
Speaker 2: find a way to impose their will on Paramount, and
Speaker 2: like you know, appointed your CEO to take control of
Speaker 2: Paramount and deal with the minority shareholders and everything else.
Speaker 2: That just wouldn't be her problem. She would just sell
Speaker 2: National Amusements and then the new person would step into
Speaker 2: her shoes and figure it all out. One reader email
Speaker 2: to suggest a really good trade, which is that she
Speaker 2: should sell National Amusements to AMC, which one's a movie
Speaker 2: theater chain and two keeps raising money from Memestock investments,
Speaker 2: and then AMC could sell the Paramounts shares to sky
Speaker 2: Dance and everyone could be better off. I don't know
Speaker 2: if that's a viable altern that's.
Speaker 3: A pretty good idea.
Speaker 2: It's pretty good. We've had an anti trust with with AMC.
Speaker 2: I don't know.
Speaker 1: There was one selsid note that suggested this was from
Speaker 1: Luke Capital, that Warner Brothers Discovery should buy it. This
Speaker 1: hasn't been proposed, they haven't shown any interest. But then
Speaker 1: they also said that that's probably not going to happen
Speaker 1: under the current administration. And also you need to see
Speaker 1: Paramount shares go down much more more than they already
Speaker 1: have for it to even be palatable. I just want
Speaker 1: to read this from Walls Fargo. I mean, first of all,
Speaker 1: Bloomberg Intelligence was out with a note saying that Paramount
Speaker 1: is probably in a weaker position than it was six
Speaker 1: months ago before this dragged out M and a process.
Speaker 2: That's always true. It's always bad to do an M
Speaker 2: and a process that hope people walk away. Although here
Speaker 2: it's not like it fell apart in due diligence. It's
Speaker 2: like it fell apart in weird governance.
Speaker 1: Yeah, weird governance. But Will's Fargo. Then said the analyst
Speaker 1: Stephen K. Hill, Miss Redstone has created a legacy of
Speaker 1: equity value destruction and this should overhang Paramount's valuation. Given
Speaker 1: her unpredictability, this will add to the long shadow over
Speaker 1: Paramount as yet another misstep. The last six months have
Speaker 1: seen governance weekend, the CEO fired in favor of management
Speaker 1: by committee, likely internal disruption to rank and file morale,
Speaker 1: massive golden parachutes, and probably a lot of deal related
Speaker 1: expensive So Stephen Cahill from Wells Fargo not holding back.
Speaker 2: A lot of companies in recent years have gone public
Speaker 2: with supervoting stock, and there's always this rationale of like,
Speaker 2: there's this brilliant visionary founder who runs the company for
Speaker 2: a sort of like long term social purpose and has
Speaker 2: not just beholden to the whims of the short term
Speaker 2: equity markets, and we want to preserve that, and so
Speaker 2: the founder shares need to have supervoting rights, and that's
Speaker 2: really better governance and better like value creation for the
Speaker 2: long term for public shaolders then letting every share have
Speaker 2: one vote. And like this is the sort of degenerate
Speaker 2: final case of that, right, Like this is a person
Speaker 2: who's not this visionary, but who just inherited the shares
Speaker 2: from the from like the visionary put the company together,
Speaker 2: and she doesn't own forty percent of the company shows
Speaker 2: five percent of the economics, and her incentives are just
Speaker 2: very different from those of other shareholders, and she seems
Speaker 2: to be making choices that are not great for other shareolders.
Speaker 2: And it's just hard for anyone to kind of come
Speaker 2: in and fix it because she controls all the votes.
Speaker 3: Do you want to talk about some later?
Speaker 2: Fare well Spargo, man, This was.
Speaker 1: An incredible scoot by a Bloomberg News's handle of it.
Speaker 2: It's so good. It's so good.
Speaker 1: Wells Fargo fires over a dozen for quote simulation of
Speaker 1: keyboard activity.
Speaker 2: Matt, I assume they were working from home. Well, it's
Speaker 2: untirely clear, like she reported this space on like a
Speaker 2: FINRA filing that Wells Fargo did. What it sounds like
Speaker 2: is that they were working from home. And so these
Speaker 2: are like people in wealth management and investment management. They
Speaker 2: were working from home, and Wells Fargo was monitoring them
Speaker 2: and making sure that they weren't just like going to
Speaker 2: the pool all day by installing some sort of tracking
Speaker 2: software in their computer that made sure that they were
Speaker 2: like typing at least once every five minutes, or moving
Speaker 2: their mouse or whatever. And these people acquired devices apparently
Speaker 2: called mouse jigglers. I picture like the you know, like
Speaker 2: the bird with water in it that like bobs up
Speaker 2: and down and.
Speaker 1: Pecks the keys like the Homer Simpson.
Speaker 2: Yeah, the Homer Simpson bird, exactly right. And so like
Speaker 2: someone is hitting a key every four minutes so that
Speaker 2: the system keeps them lied on while they go off
Speaker 2: and run errands or whatever. And Wills Fargo somehow found
Speaker 2: out and fired them all saying we don't, you know,
Speaker 2: accept any unethical behavior.
Speaker 3: Yeah, I mean, it's just amazing.
Speaker 1: Reading directly from the filing, apparently the staffers, all of
Speaker 1: whom are in the firm's wealth and Investment management unit,
Speaker 1: were quote discharged after review of allegations involving simulation of
Speaker 1: keyboard activity creating impression of active work. My first reaction was,
Speaker 1: if we're talking about wealth managers, I feel like they
Speaker 1: should be alcolfing anyway. And then also, the term mouse
Speaker 1: jiggler really sounds like an insult, but it is a
Speaker 1: real device and you can buy it for twenty dollars
Speaker 1: from Amazon.
Speaker 2: Yeah, I agree with you that. Like, so one, if
Speaker 2: they're wealth managers, they should be out on the golf course,
Speaker 2: not at the keyboard. But two, like just in general,
Speaker 2: making sure that you're typing all the time is like
Speaker 2: the worst way to measure productivity and contributions of like
Speaker 2: a financial professional. Right. It's like that can't be what
Speaker 2: the job is about. Right. The job can't be like
Speaker 2: how many keys do you hit in a minute? Right?
Speaker 2: There has to be some other form of value add there,
Speaker 2: and Wellsvarrio is measuring like the sort of like lowest
Speaker 2: thing that could measure, which is just are you hitting
Speaker 2: the keys? I mean, what I find most amazing about
Speaker 2: this whole situation is that like Wells Fargo has been
Speaker 2: here before in like much more egregious ways, which is
Speaker 2: that they had like a famous scandal in twenty sixteen
Speaker 2: where they set up millions of fake accounts because like
Speaker 2: they had all the like branch employees were basically held
Speaker 2: to a standard of like that to open like eight
Speaker 2: different products today, Right, So if you came in to
Speaker 2: open a check on account, they'd be like, hey, do
Speaker 2: you want to add online checking? Do you want to
Speaker 2: add a credit card? Do you want to add a mortgage?
Speaker 2: Do you want to add a saving Because you know,
Speaker 2: if they wanted to open eight different products every day,
Speaker 2: and so a lot of people realizing how hard that was. Instead,
Speaker 2: we're just doing it like illicitly. By they'd open a
Speaker 2: checking out for someone and just slipped them a credit
Speaker 2: card without them knowing about it, And I love that.
Speaker 2: It's like eight years later, Wells Fargo still seems to
Speaker 2: have this culture of like one using these very crude
Speaker 2: metrics to manage its employees' performance, and two having the
Speaker 2: employees like game them in egregious ways.
Speaker 3: Yeah, it's pretty painful.
Speaker 1: I mean you think about specifically the wealth management unit,
Speaker 1: and this has been a focus for the bank, trying
Speaker 1: to beef up their wealth management is it feels like
Speaker 1: a lot of the big banks are and this probably
Speaker 1: doesn't hurt them, but it is just embarrassing and it
Speaker 1: feels like they haven't quite recovered from that twenty sixteen episode.
Speaker 2: People talk about like bank culture, and it really like
Speaker 2: all of these stories paying such a bad picture of
Speaker 2: Wells Fargo's culture. There's another story a few years ago
Speaker 2: where Wells fire fired a bunch of investment bankers for
Speaker 2: expensing seamless too early. Yeah, you know, like you could
Speaker 2: order dinner if you stay past eight or whatever, and
Speaker 2: people were ordering dinner at like six point fifteen and
Speaker 2: then like altering the receipts so that it looked like
Speaker 2: they stayed later.
Speaker 3: It's like, that's pretty bad.
Speaker 2: All of this stuff. It's like the most petty micro
Speaker 2: management of their people and the most like cynical gaming
Speaker 2: of that micro management.
Speaker 1: Yeah, I feel in some ways like a naive, innocent
Speaker 1: person because I hear that and I'm like, oh my god,
Speaker 1: you can get fired for that, And I think about
Speaker 1: my own life. I get a card to the office
Speaker 1: because I get in at six am, but sometimes I
Speaker 1: get in at six oh six am and not six am,
Speaker 1: and I wonder if I'm going to get fired for
Speaker 1: expensing my uber But altering your receipts is a different
Speaker 1: level that I wouldn't do.
Speaker 2: Right, Like, the thing is, you're not going to get
Speaker 2: fired because like, well I shouldn't say that, Like.
Speaker 3: No, say it. Put it in the record.
Speaker 2: Both you and our employer take more intelligent, long term
Speaker 2: view of what's going on, and like everyone understands that
Speaker 2: you're acting in good faith and that the program exists
Speaker 2: to encourage you to do the good work that you do. Right,
Speaker 2: And then there's the other thing where it's like nickel
Speaker 2: and diming people and like everyone is kind of doing
Speaker 2: the minimum and like trying to check the boxes. Yeah,
Speaker 2: that leads to bad outcomes.
Speaker 1: Well, speaking of things that made me nervous, I was
Speaker 1: searching on Amazon for some of these mouse jigglers on
Speaker 1: my work desk stot and let me let me say
Speaker 1: for the company right now. It was for research for
Speaker 1: this podcast specifically, but I found one cost twenty two
Speaker 1: dollars and ninety nine cents. That price is actually down
Speaker 1: twenty three percent, but more than a thousand of them
Speaker 1: have been bought in the last month, at least according
Speaker 1: to Amazon bills, itself is undetectable. And again, being an
Speaker 1: innocent person, I thought that not a lot of people
Speaker 1: did this, But just looking at how frequently people are
Speaker 1: buying mouse jigglers on Amazon, apparently it's still hot. People
Speaker 1: are still doing this.
Speaker 2: I am very interested in the cat and mouse game,
Speaker 2: no pun intended, uh oo, how people are catching these
Speaker 2: uncatchable mass jigglers right, Like someone is like building the
Speaker 2: algorithms that like detect suspiciously regular mass jigling and like
Speaker 2: report it to HR.
Speaker 1: Or do you know, well to that point, can I
Speaker 1: read you some of the reviews? I thought these were
Speaker 1: really illuminating. Oh yeah, this is a five star review
Speaker 1: from June one so recently. They said that it was
Speaker 1: a great little device. But if you're being monitored by
Speaker 1: your employer, it only moves back and forth. So if
Speaker 1: they can see your screen and you want to use
Speaker 1: this to be able to walk away, I would be careful.
Speaker 1: They would clearly be able to see you're not there.
Speaker 1: And then here's a four star review from March. This
Speaker 1: person wrote, at least with my mouse, it moves the
Speaker 1: cursor all the way across the screen. So if you're
Speaker 1: being monitored by management, this would not look at all natural.
Speaker 1: These are all Wells Fargo employees, by the way, just kidding,
Speaker 1: that's a.
Speaker 2: Joke, right. I sort of assumed that there was some
Speaker 2: sort of like algorithmic tracking of like there's some like
Speaker 2: a computer system make sure that you're typing every at least,
Speaker 2: you know, every once in a while. But like the
Speaker 2: idea that the managers just have like a screen up
Speaker 2: with like six of their employees' screens and they just
Speaker 2: watch it all day to make sure that workers are
Speaker 2: working is like even more dystopian than what I thought.
Speaker 2: Like that's really grim, Like what why ken't the manager
Speaker 2: do some work instead of just monitoring their employees screens.
Speaker 1: Maybe that's someone's whole job, you know, in this bright
Speaker 1: new world that we live in. You're the vice president
Speaker 1: of screen monitoring at.
Speaker 2: Wellston right, and then like you get like a big
Speaker 2: win when you fired twelve people for installing mat streets.
Speaker 2: You're like, look, I've added so much value as the
Speaker 2: screen monitoring vice president because I've caught the people who
Speaker 2: were just master vision instead of really moving their mass.
Speaker 1: I wonder if that works from home? Do you need
Speaker 1: to be in the office to do that.
Speaker 2: We're going to command center of like eight screens. And
Speaker 2: that was the Money Stuff Podcast.
Speaker 3: I'm Matt Levian and I'm Katie Greifeld.
Speaker 2: You can find my work by subscribing to the Money
Speaker 2: Stuff newsletter on Bloomberg dot com.
Speaker 1: And you can find me on Bloomberg TV every day
Speaker 1: between ten to eleven am Eastern.
Speaker 2: We'd love to hear from you. You can send an
Speaker 2: email to Money Pod at Bloomberg dot net ask us
Speaker 2: a question, or we might answer it on the air.
Speaker 1: You can also subscribe to our show wherever you're listening
Speaker 1: right now and leave us a review. It helps more
Speaker 1: people find the show.
Speaker 2: The Money Stuff Podcast is produced by Anna Maserakis and
Speaker 2: Moses and On.
Speaker 1: Our theme music was composed by Blake Maples.
Speaker 2: Brendan Francis Nenham is our executive.
Speaker 1: Producer, and Stage Bowman is Bloomberg's.
Speaker 3: Head of podcasts.
Speaker 2: Thanks for listening to The Money Stuff Podcast. We'll be
Speaker 2: back next week with more stuff.
Speaker 4: The Pal