Money Stuff: Short Squeeze as a Service

(...) In light of the IPO documentation and other publicly available information, “a poor controversies assessment, a very poor governance assessment and a low overall ESG rating should not surprise anyone”, said Frédéric Ducoulombier, a programme director at the Edhec business school’s Climate Institute. “This is very close to a governance horror story for public-market investors.”

ESG is strange because “E” and “S” are somewhat in the eye of the beholder, but there are pretty mechanical and widely accepted standards for “G.” Is SpaceX a corporate governance horror story? Just, obviously, absolutely yes. I don’t even mean that pejoratively! Maybe being a governance horror story is a good thing! Good corporate governance essentially means making corporate management answerable to shareholders, and that’s not obviously or universally good; shareholders have their own flaws. It is perfectly reasonable, based on historical evidence, to think “giving Elon Musk absolute control of a trillion dollars of public investors’ money, with no meaningful voting rights or enforceable fiduciary duties or any other constraints on Musk’s behavior, will work out well for them financially and entertainment-wise.” A lot of smart people have more or less made that bet, and who am I to second-guess them?

But does SpaceX give Elon Musk absolute control of the company, with no meaningful voting rights for public investors and no enforceable fiduciary duties or any other constraints on Musk’s behavior? Yes. Is that “bad governance,” in the generally accepted meaning of the term? It is the worst. The end, zero out of 10 for G, done. “It would be difficult for a serious ESG data provider, or for a fund applying its own ESG screening, not to identify major governance concerns at SpaceX,” Ducoulombier hilariously told the Financial Times. Duh! (...)