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CEO Daily: Tuesday, 11th April

Good morning.

Tesla nudged past GM in market value yesterday, reaching $51 billion, even though the company sold just 76,230 cars last year – compared to GM’s 10 million. To do the math for you, that means Tesla has less than one percent of GM’s market share. And by the way, Tesla lost three quarters of a billion dollars last year.

But never mind. Investors seem to believe Elon Musk, whose ambitions include colonizing Mars, has already escaped the gravity of financial markets. “In the minds of its customers, employees, and shareholders, Tesla isn’t just another company,” according to research firm Piper, whose report putting a price target of $368 on the stock, well above yesterday’s $312 close.

Take a moment to give Musk due credit. What he has done is beyond anyone’s ability to imagine a decade ago. He has created a new car company from scratch, built an electric sports car that people love, and taken the lead in autonomous driving.

Still, does that justify a market value of $51 billion? Not unless you believe the leaders of Ford, GM, and Toyota are asleep at the switch, and will simply hand over the market to their upstart rival.

Worth looking at what’s happening today at Whole Foods, which a decade ago was disrupting the grocery store business from the high end. Lo and behold! It turned out that Kroger and A&P could sell fresh food, too, and at lower prices. Activist Jana Partners has now upped its stake in Whole Foods, and is pushing for major changes.

Musk and GM CEO Mary Barra are both scheduled to be at the White House today, to discuss tax reform and infrastructure with President Trump. One question on the table: should the government end tax incentives for Musk’s pricy electric cars?

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

 

Top News

Claws and Effect At Wells Fargo

Wells Fargo said it will claw back another $75 million from ex-CEO John Stumpf and Carrie Tolstedt, the head of community banking who directly oversaw the bank’s abusive sales practices for years. In publishing an internal report into the scandal, Wells put the lion’s share of the blame on Tolstedt, faulting Stumpf only for failing to wise up to her failings sooner. Tolstedt’s lawyers issued a statement rebutting those conclusions, while others observed that the division of blame was consistent with evidence of gender bias elsewhere in the bank. A study last month showed that female advisors had been 25% more likely to lose their jobs than male ones for alleged wrongdoing in the scandal. Fortune

No More Sanctions on Russia – Yet

The G7’s foreign ministers chose not to threaten Russia with fresh sanctions for continuing to support the regime of Syrian president Bashar al Assad. The use of chemical weapons against largely civilian targets last week by Assad’s air force had triggered the first U.S. military action against Syrian government forces since the civil war started six years ago. “We rededicate ourselves to holding to account any and all who commit crimes against the innocents anywhere in the world,” Secretary of State Rex Tillerson said, reiterating the principles that have underpinned U.S. foreign policy since WWII. Tillerson will visit Moscow this week but will not meet with President Vladimir Putin. Reuters

Toyota Upgrades Kentucky Plant

Toyota said it will invest $1.3 billion in its plant at Greensboro, Kentucky over the next three years. The new investment was already prefigured in an announcement made in early January outlining $10 billion in spending over the next five years, and was in the works well before the presidential election in November. It won’t lead to any more jobs at the plant, Toyota’s biggest anywhere, but will allow it more flexibility to adapt quickly to changing market conditions, notably in rescaling local production of SUVs and sedans. The Camry, the most popular sedan in the U.S., has been hard hit in recent months by the trend to larger vehicles. Fortune

United in Outrage 

United Air Lines engineered another PR disaster for itself when it got airport guards to drag a passenger off a plane after he refused to accept being bumped off the overbooked flight. CEO Oscar Munoz stood by his staff, calling the passenger in question “disruptive and belligerent.”  The stock market ignored the inevitable social media storm, pushing the company’s shares up 1% in recognition of United’s zealous enforcement of a policy that aims to ensure full capacity utilization, and in the confident expectation that no-one really cared enough about the passenger to resist a cut-price ticket on United in future. Fortune

Around the Water Cooler

A Whole Lotta Pressure

Activist investor Jana Partners said it had taken a 9% stake in Whole Foods, making it the upscale grocer’s second-largest investor and raising the pressure on it to up its game after a string of disappointing figures. Same-store sales fell 2.5% in its most recent fiscal year, and have fallen for six straight quarters. Its shares have fallen by half from their all-time high in October 2013, as the likes of Kroger, Wal-Mart, Blue Apron and Amazon have all muscled in on its territory after their respective fashions. They rose 10% Monday. Fortune

Boycott? What Boycott?

Ivanka Trump’s clothing collection had a banner year in 2016, defying efforts by opponents of her father to organize a boycott of her wares. According to the annual report of G-III Apparel Group, which makes clothes for numerous brands besides Ms. Trump’s, the wholesale revenues from her lines rose 61% to $47.3 million in the year to Jan. 31. It’s not clear what the retail value was, but anecdotal reports of heavy discounting this year, along with some high-profile junkings by stores such as Nordstrom and Neiman Marcus, suggest 2017 will be a difficult year. Fortune

DoJ Issues Loom for Shell After Nigeria Bribe Claims

Corruption in the natural resources industry is rather too routine to be news every day, but sometimes the figures are too big to ignore. Royal Dutch Shell and Italy’s Eni paid over $1.3 billion in bribes to past and serving Nigerian officials for the rights to a lucrative offshore oil block, according to an investigation by two non-governmental organizations. Shell told the BBC that there was no other way to secure the deal and that the Nigerian government of the day approved its actions. At the time of the deal for the OPL245 block, Shell was under a deferred prosecution agreement with the Department of Justice after settling a case under the Foreign Corrupt Practices Act. Fortune

Toshiba Humbled by Its Accountants

Toshiba filed its twice-delayed results for the nine months through December, but was unable to persuade its accountants, PricewaterhouseCoopers, to sign off on them. The move is without precedent in Japan for a company of Toshiba’s size and prestige, and puts the country’s regulators in an awkward position: either they force it to delist for failing to present audited results within the required timeframe, or they risk undermining broader confidence in Japan Inc.’s accounts by turning a blind eye. Elsewhere, Foxconn said it would bid up to $27 billion for Toshiba’s semiconductor unit, the crown jewel now being sold to plug the holes left by losses at its nuclear power business Westinghouse. Reuters

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com