Musk’s $1tn bonus tests investors’ willingness to live without him

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.Tesla buyers resolve by Thursday whether or not Elon Musk ought to be eligible for a contentious $1tn bonus. The query is partly monetary, and partly philosophical. For a lot of, it’s each.A shareholder who merely needs their Tesla inventory to rise in worth must vote in favour. The quantity at stake is astronomical, however Musk solely will get it if he hits very powerful targets. If he fails to get his ransom and visibly zones out — or quits — Tesla’s $1.4tn market capitalisation, laughably indifferent from monetary fundamentals, might collapse.A shareholder with broader considerations may suppose in a different way. They may need to uphold orthodox pay practices at corporations throughout their portfolio. Or discourage outlandish particular person fortunes. In that case, they’d be extra prone to vote in opposition to. If Musk quits, so be it. Tesla buyers lose; the universe wins.Norway’s state pension fund is an instance of the place the road blurs. Its stake in Tesla is value about $12bn. However that’s simply 0.8 per cent of its whole fairness portfolio. The price of different corporations aping Tesla, however with much less conditionality, may very well be even larger. Norway plans to vote No.Since Musk has a 15 per cent stake and may himself vote, the chances are in his favour. Index funds BlackRock and Vanguard, with a mixed 12 per cent, have cause to suppose just like the Norwegians, however might not need to rock the boat. Because the deadline looms, the query for every investor isn’t whether or not Musk is deserving, however how a lot they will afford to do with out him.john.foley@ft.com