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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Tesla investors decide by Thursday whether Elon Musk should be eligible for a contentious $1tn bonus. The question is partly financial, and partly philosophical. For many, it’s both.
A shareholder who simply wants their Tesla stock to rise in price ought to vote in favour. The number at stake is astronomical, but Musk only gets it if he hits very tough targets. If he fails to get his ransom and visibly zones out — or quits — Tesla’s $1.4tn market capitalisation, laughably detached from financial fundamentals, could collapse.
A shareholder with broader concerns might think differently. They might want to uphold orthodox pay practices at companies across their portfolio. Or discourage outlandish individual fortunes. In that case, they would be more likely to vote against. If Musk quits, so be it. Tesla investors lose; the universe wins.
Norway’s state pension fund is an example of where the line blurs. Its stake in Tesla is worth about $12bn. But that’s just 0.8 per cent of its total equity portfolio. The cost of other companies aping Tesla, but with less conditionality, could be even higher. Norway plans to vote No.
Since Musk has a 15 per cent stake and can himself vote, the odds are in his favour. Index funds BlackRock and Vanguard, with a combined 12 per cent, have reason to think like the Norwegians, but may not want to rock the boat. As the deadline looms, the question for each investor isn’t whether Musk is deserving, but how much they can afford to do without him.
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