Tesla and Elon Musk Show Why Governance Doesn’t Matter—Until It Does
Adani Enterprises are almost back where they were. At Tesla, the governance mess is one explanation for a roughly 20% fall in the stock this year, even as the likes of Microsoft and Nvidia, fellow members of the Magnificent Seven, have risen.
These companies are sometimes considered peers because of their focus on artificial intelligence, but Musk last month threatened to take his AI interests elsewhere if he didn’t control 25% of Tesla, compared with about 13% today. Over five years, the stock is still up roughly 10-fold.
Whether Musk would actually neglect his single most valuable asset is doubtful. There may be a way to square the circle with a new, supervoting Tesla share class—the same sort Mark Zuckerberg at Meta and Larry Page and Sergey Brin at Google parent Alphabet own.
At face value, though, shareholders have an unappealing choice between, on the one hand, another hugely dilutive pay deal to replace the rescinded 2018 one and, on the other, losing Musk’s attention. The drama, which will continue to play out noisily in the coming months, seems to be confirming an old truism: Good governance doesn’t matter until suddenly it does.
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