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A Trillion Dollars Is No Joke By Spencer Jakab
Don't adjust your screens-the newsletter looks a little different starting today, with the data box above the daily writeup. Markets look a little different than they did on Friday , too, as they shake off a very weak jobs report: Stock futures point to gains. Inflation data and a revision to jobs estimates this week could change the tone ahead of next week's Fed decision, but probably not the high chances of a rate cut.
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A proposed pay package worth up to $1 trillion for Tesla's gag-loving boss is totally serious, but it almost sounds like Dr. Evil's nuclear blackmail demand for $100 billion in "Austin Powers: The Spy Who Shagged Me." Unable to stop laughing, the president tells him it's more than all the money in the world in 1969.
"That's like saying 'I want a kajillion bajillion dollars!'"
The odds of Elon Musk getting the full sum are slim. You can still count on renewed debate about lavish CEO pay, though-probably framed in terms of fairness. Executive compensation tracker Equilar calculates that the 100 best-paid U.S. bosses earned 300 times what their average employee did last year.
Individual companies' ratios vary wildly. Starbucks chief Brian Niccol took the crown at 6,666-to-one. His stock awards after accepting the job last year were immense, but baristas also don't earn much. Satya Nadella's pay at Microsoft or Tim Cook's at Apple look less lopsided.
Lost in the debate is whether investors are being harmed by executive share awards. It's easy to overlook during a bull market when the public's wealth is rising, too. Numbers are getting big enough to matter, though, as all that new stock dilutes existing shareholders. Companies mask the effect by using cash to soak up that stock.
Take biotech company Regeneron, which pays many employees beyond the C-suite that way. It spent more than $14 billion on buybacks between 2020 and 2024, according to FactSet, equal to about 60% of its operating cash flow over that time. But its shares outstanding barely changed because of offsetting issuance.
Most companies that juggle large stock payouts and big buybacks manage to reduce share counts. Facebook parent Meta spent $129 billion, or 42% of its operating cash flow, on buybacks over that period, and its shares outstanding fell by 11%. Fewer shares give investors a larger claim on the company's future profits.
Congress added a last-minute 1% tax on buybacks into 2022's Inflation Reduction Act to discourage the "self-serving" practice. The tax is only levied on "net" buybacks, though, so it falls disproportionately on companies like eBay, Dillard's or AIG that have multiplied shareholder wealth by retiring more than half of their shares over a decade.
Tesla is at the other extreme. Its share count has grown by 71% since 2015 with no buybacks or dividends to reward shareholders.
Few complain since Musk's persona is so pivotal to the stock's lofty valuation, and stock awards are for attracting and keeping top talent. But will they balk at motivating him with an additional stake of up to 12%? Even without a single additional dollar of pay, hitting the proposed goals would make Musk the world's first trillionaire.
Let voters and politicians debate what's fair for society. Investors need to ask if they're being treated fairly by the boards who work for them.
Slightly Less Magnificent
The Mag 7 stocks' market value is equivalent to about 60% of U.S. gross domestic product. Last Tuesday's newsletter mistakenly said it was 70%. Our calculation stemmed from the so-called Buffett Indicator that measures stock market value as a share of GDP, now near a record at around 210%. If the S&P 500 were the numerator then our calculation would have been correct, but the indicator uses the broader Wilshire 5000 index. The S&P 500's market value is 180% that of the U.S. economy.
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Stocks I'm Watching
Robinhood : The online retail brokerage, AppLovin and Emcor are set to join the S&P 500 on Sept. 22, the index's compiler said late Friday. All three stocks rose in premarket trading Monday.
Nutanix : The cloud-computing company will enter the S&P MidCap 400 at the same time. Shares rose ahead of the opening bell.
Hyundai Motor : South Korea and the U.S. reached a deal to release Korean citizens who were detained last week in an immigration raid at a Hyundai plant in Georgia. Shares were little changed.
Casey's General Stores : The convenience-store chain is due to report earnings. Shares rose slightly premarket.
BBVA ; Sabadell : A merger that would create Spain's largest bank drew closer on Monday as BBVA submitted a tender offer to Sabadell shareholders.
One Big Chart
Salesforce Has to Prove Software's Staying Power in AI Age
Salesforce is now the largest company under a growing cloud of existential worry about the future of software businesses in the age of AI.
What I'm Reading Why do bond markets have the jitters? It's hard to pin down the cause of the latest market swings, but the list of culprits suggests weaker demand for the longest bonds could last. ( WSJ ) Is Britain headed for a debt crisis? U.K. long-term borrowing costs hit their highest level in decades, and some think it is a canary in a coal mine for other heavily-indebted countries. ( WSJ ) Oil tycoons' big bet on President Trump is starting to pay off. ( WSJ ) They're divorced. A 2% mortgage is keeping them together. ( WSJ ) Consumer-sentiment readings have declined this year amid concerns about tariffs, labor market conditions, and policy uncertainty. Consumer behavior tells a different and far more encouraging story. ( Barron's ) Today in Markets History
On this day in 1916, Congress passed the Revenue Act of 1916, creating the federal estate tax.
Beyond the Newsroom
WSJ | Buy Side: See our breakdown of Apple's wireless headphone lineup to find the best pair for you.
About Me
Business and finance have fascinated me for a long time. Before writing this newsletter, I edited The Wall Street Journal's Heard on the Street team for a decade, wrote two investment books and managed a team of stock analysts at a global investment bank.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
September 08, 2025 06:39 ET (10:39 GMT)
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