Finimize - ❌ Musk was denied billions

What’s going on here?

Elon Musk’s $56 billion pay deal was canceled after a lengthy court battle in the state that the Tesla head honcho loves to hate.

What does this mean?

Elon Musk has many skills, including the ability to convert a legion of young men into loyal fans of oddly shaped trucks through the medium of podcasts. But clearly, winning over a court of law is not one of them. Musk was granted a $56 billion ten-year pay deal back in 2018, the biggest in the history of corporate America. There was just one problem: a disgruntled shareholder, with a whole nine Tesla shares to their name, who argued that investors in the firm weren’t given a big enough heads-up. On Tuesday, a Delaware judge agreed. So even though Musk argued that the money could fund humanity’s move to Mars when the Earth crumbles, the court canceled the record-breaking compensation.

Why should I care?

Zooming out: A win for one is a win for all.

Investors in the US don’t usually kick up a fuss about how much company bosses are paid. Not that it has anything on Musk’s deal, mind you: that $56 billion was six times what 2021’s 200 highest-paid executives made combined. See, big payouts tend to be made in the form of shares or share options, as Musk’s was. That incentivizes big bosses to drum up the share price, which only benefits everyday shareholders too.

The bigger picture: “G” for “Greater good”.

Media has lit up the “E” in “ESG” with eco-friendly LED lights. But while environmental considerations matter, especially if you’d rather save the planet than follow Musk into infinite space, the social and governance factors tend to be overlooked. Musk’s pay debacle could dust off the governance folder, though: independent committees should ensure that a CEO’s salary lines up with the value they deliver, and this latest ruling could turn that theory into more common practice.

What’s going on here?

Novo Nordisk’s profit put on weight last year, one of the few spots where the Danish weight-loss drug giant will accept a little extra bloating.

What does this mean?

Weight-loss drugs promise to keep our waistlines in check, and with nearly half of US adults already interested in trying the newly mainstream medication, it’s no wonder that the sector was one of last year’s biggest investing themes. Novo was a real standout: its Ozempic and Wegovy products flew off the pharmacists’ shelves especially quickly, making up 40% of the firm’s total sales. That meant Novo’s obesity care department made 150% more revenue than the year before, enough to secure expectation-beating results as a whole. Plus, with doctors expected to write scripts for Ozempic and Wegovy as if the Sackler family were looking over their shoulders, Novo’s predicting revenue that’s another 22% higher this year.

Why should I care?

Zooming out: Let’s get medical.

Novo is now, ironically, Europe’s heftiest firm. Investors piled into the stock last year, won over by the sheer number of potential slimmers out there. More than two-thirds of US adults are said to be overweight or obese, after all. On top of that, though, are the company’s claims that Wegovy could ease the symptoms of ailments like kidney and heart disease. If Novo can prove that, insurance companies will be more likely to cover the cost, making the medicines more accessible to the masses.

The bigger picture: Patents are a virtue.

Novo’s Swiss rival didn’t fare quite as well, reporting lower-than-expected sales and profit for last year and underwhelming predictions for this year. Novartis pinned the blame on expiring patents on some of its biggest-selling medications. When they time out, rivals can launch competing versions for less, nabbing market share faster than you can get to the drugstore. That’s a timely reminder for investors: medical companies can’t get away with being one-hit wonders forever.