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Tesla’s board is not seeking to replace Elon Musk as chief executive. He said so on Thursday, in response to a Wall Street Journal article he had stated otherwise. The pointing is bad because it should not prove either.
Musk is, in a famous way, not just a automotive executive. It is also a pie in front of corporate government advocates. For decades, policies that aim to make the company’s directors and the best executives in value creating. Tesla has introduced some of their most sacred principles, and shareholders voting at its annual meetings have mainly approved.
To Whit: He has had many jobs, running the Rocket-Creator Spacex and artificial intelligence clothing XAI even before he went to the top of the so-called Donald Trump government efficiency department. Companies can welcome executives who go to the public service. For example, JPMORGAN allows older people going to Washington to keep their rewards. But usually such roles are consecutive than simultaneous.
Musk has also written numerous controls that he has then failed in money, from the targets of car delivery to the date of arrival of self-driving cars. Then it was the $ 56 billion bonus that the board approved between what a judge called the oversight ‘Lackadasical’ – a word and Tesla Mayor Robyn Denholm refused.
Investors do not care, collectively, about it. That the company currently has five independent directors, with the US average, nine, according to Spencer Stuart, has had little effect on the share price. Someone who parked $ 1 in Tesla shares 10 years ago now has nearly $ 20. The same dollar in S&P 500 is worth $ 3.
It is not that corporate governance does not matter. But there are times when other considerations prevail. There is a bank ad that when the client cannot pay a $ 100 loan, it is their problem; When they can’t pay a $ 1 billion loan, it’s the bank problem.
Something analogs applies to Tesla, in that moss is too big to draw, and also very valuable. Get $ 11 billion of TESLA forecasting profits for 2027, collected from visible alpha. Even in an extremely generous multiple of 45, like luxury companies like Ferrari and Hermès, the result is a market capitalization of $ 500BN, against the $ 884BN current of Tesla.
This suggests that additional $ 400 billion reflects the implicit value of Musk itself. This makes sense: without it, the company can make cars, but certainly not humanoid assistants or connected robotaxis, all the things that investors value today as if they were true.
In addition, it is due to Musk that Tesla’s rating benefits from the support of a crowd of retail traders. As Barclays analysts have pointed out, shares have sometimes traded more in accordance with Bitcoin than the wider market. Old rules of making carmking do not apply to tesla; Like her or not, not even the rules of good governance.
John.foley@ft.com
