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Analysis-Musk’s $5 billion Tesla stock haul has charity circuit buzzing

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November 12, 2021

By Hyunjoo Jin and Jessica DiNapoli

(Reuters) – The world’s richest man suddenly has more cash than most people can spend in their lifetime. What will he do with it?

Elon Musk, whose net worth is pegged by Forbes at $270 billion, had traditionally kept his wealth tied up in his stake in Tesla Inc, the electric car maker founded in 2003. He borrowed against his stock when he needed more cash and sold stock mostly to cover tax obligations.

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That was until this week, when his trust sold close to $5 billion worth of Tesla stock in the open market after Twitter users voted for him to sell 10% of his shares in an online poll he created. He sold an additional $1.1 billion worth of Tesla stock to pay taxes associated with the exercising of stock options.

More stock sales are expected given that he has sold only about 3% of his Tesla shares thus far. He has not disclosed what he will do with the proceeds, yet the cash haul has already created a buzz among major charities which are always vying for wealthy donors.

“His opportunity to have great impact is to donate very significant sums of money to leading organizations that are dealing with the most pressing problems with global poverty and access to healthcare,” Melissa Berman, CEO of Rockefeller Philanthropy Advisors, a nonprofit that advises on charitable giving, said in an interview.

Musk did not respond to requests for comment on his plans.

Musk’s public philanthropy gestures have so far trailed other billionaires. Musk and Amazon.com Inc founder Jeff Bezos have donated less than 1% of their net worth, whereas Warren Buffett and George Soros had given away more than 20% of their net worth as of early September, according to Forbes.

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It is possible, however, that many of Musk’s charitable donations have not been made public.

Musk signed the Giving Pledge in 2012, a commitment by some billionaires to give at least half their wealth to philanthropy in their lifetime or upon their death. In 2001, he set up the Musk Foundation, offering grants for the “development of safe artificial intelligence to benefit humanity” among other causes, according to its website.

Musk’s foundation has over $200 million in assets, which “isn’t that big” compared with his fortune, said Brad Smith, the president of Candid, a nonprofit information service that provides information on other nonprofits and foundations.

Earlier this year, Musk and his foundation offered a top prize of $50 million to the inventor who can come up with a technology to help remove carbon from the atmosphere. The prize has yet to be won.

Musk has also flirted with more ambitious philanthropy goals. He tweeted last month that “if (the United Nations World Food Programme) can describe … exactly how $6 billion will solve world hunger, I will sell Tesla stock right now and do it.”

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Musk was responding to a plea for a donation from David Beasley, the World Food Programme’s executive director. Beasley tweeted he was willing to meet Musk to provide more details, and it is not clear if the two explored the idea further.

Beasley and the World Food Programme did not immediately respond to a request for comment.

Musk has shown in previous tweets that he is thinking about ways to have a big philanthropic impact. In January, he asked Twitter users about “ways to donate money that really make a difference (way harder than it seems.)”

TAX INCENTIVES

There are also tax benefits associated with charitable giving. Under the U.S. tax code, most donations can be deducted from one’s taxable income.

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“Almost any billionaire that you can think of donates money and minimizes tax bills,” said Ray Madoff, a professor at Boston College Law School where she is director of the Forum on Philanthropy and the Public Good.

Besides donating cash, there would be an additional tax benefit for Musk gifting Tesla stock. This is because shares that are donated to charity are not subject to capital gains tax, as they would be if they were sold.

“It’s like a double bonus of donating. He is in a position where there’s a substantial incentive to donate,” said Brian Mittendorf, an accounting professor at the Ohio State University.

Musk’s younger brother, Kimbal Musk, who is also a Tesla board member, deployed that tactic as recently as last week. He gifted 25,000 Tesla shares worth $31 million to an unidentified charity.

With Tesla’s shares hovering near record highs, Musk could take advantage of their current valuation by donating more of them, said Bob Lord, an associate fellow at the Institute for Policy Studies who studies tax policy.

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“If you’re going to donate stock, when do you want to donate it? When it is at its peak,” Lord said.

(Reporting by Hyunjoo Jin in San Francisco and Jessica DiNapoli in New York; Editing by Greg Roumeliotis and Matthew Lewis)

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Deutsche Post CEO favourite to become Telekom chairman – sources

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December 5, 2021

BERLIN (Reuters) – Frank Appel, the chief executive of German logistics company Deutsche Post, is the favourite to become the next supervisory board chairman of Deutsche Telekom, two sources close to the matter told Reuters.

The sources said Deutsche Post’s supervisory board is due to meet on Wednesday and Deutsche Telekom’s board will meet a week later to discuss the matter.

Both companies declined to comment.

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The Handelsblatt newspaper reported on Saturday that Appel would potentially be proposed for election at Deutsche Telekom’s annual meeting on April 7.

The term of office of Telekom chairman Ulrich Lehner, who has headed the Telekom supervisory body since 2008, ends at next year’s shareholder meeting. He had already confirmed that an external search for a successor was under way.

Appel’s predecessor at Deutsche Post, Klaus Zumwinkel, also served as supervisory board chairman of Telekom.

The German government holds stakes in both companies.

Appel, a former McKinsey consultant, has been with Deutsche Post since 2000. In 2002, he became a member of the board of management, and in 2008 he moved up to the post of CEO.

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His contract runs until 2022 and a decision on his future at the Post had been expected soon. Some industry insiders have speculated that Appel could be ready to move on given that Deutsche Post has posted record results through the pandemic.

(Reporting by Matthias Inverardi and Nadine Schimroszik; Writing by Emma Thomasson; editing by David Evans)

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Canadian employers, facing labor shortage, accommodate the unvaccinated

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December 5, 2021

By Julie Gordon and Steve Scherer

OTTAWA (Reuters) – Canada’s tight labor market is forcing many companies to offer regular COVID-19 testing over vaccine mandates, while others are reversing previously announced inoculation requirements even as Omicron variant cases rise.

Canadian Prime Minister Justin Trudeau’s government adopted one of the strictest inoculation policies in the world for civil servants and has already put more than 1,000 workers on unpaid leave, with thousands more at risk.

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Airlines, police forces, school boards and even Canada’s Big Five banks https://www.reuters.com/world/americas/canadas-major-banks-require-employees-entering-premises-be-vaccinated-2021-08-20 have also pledged strict mandatory vaccine policies. But following through has proven less straightforward, especially as employers grapple with staffing shortages and workers demand exemptions.

Job vacancies in Canada have doubled so far this year, official data shows, and vaccine mandates can make filling those jobs harder, potentially putting upward pressure on wages. That could fuel inflation https://www.reuters.com/world/americas/canadas-annual-inflation-rate-hits-47-oct-highest-since-feb-2003-2021-11-17, already running at a near two-decade high.

“It’s already difficult to find staff, let alone putting in a vaccine mandate. You’d cut out potentially another 20%” of potential workers, said Dan Kelly, chief executive of the Canadian Federation of Independent Business.

There are pitfalls to employing the unvaccinated. Companies run a higher risk of COVID-19 outbreaks and many vaccinated employees are uncomfortable working with those who have not had the jab, said industry groups and marketing experts.

At Luda Foods, a Montreal-based soup and sauce maker, president Robert Eiser said he has 14 open jobs, no vaccine mandate and no plans to restrict new hires to the vaccinated.

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“I don’t know that I want to reduce the (labor) pool, which is already quite low,” said Eiser. “We need to attract people to meet the demand. If we don’t, our competitors will.”

Data released on Friday underpinned Canada’s tight labor market, with a hefty 153,700 jobs https://www.reuters.com/markets/us/canada-posts-hefty-job-gains-outlook-clouded-by-omicron-variant-2021-12-03 added in November. It also showed a growing mismatch between available workers and unfilled jobs. And job postings are far above pre-pandemic levels. (Graphic: Canada job postings surge above pre-pandemic level Canada job postings surge above pre-pandemic level, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA2/klvyknzklvg/chart.png)

WALKING BACK

The province of Quebec backtracked on a vaccine mandates for healthcare workers last month, saying they could not afford to lose thousands of unvaccinated staff. Ontario, which was also eyeing a mandate, said it would not go ahead.

Toronto-Dominion Bank and Bank of Montreal have both softened their vaccine policy to allow regular testing for workers who missed their Oct. 31 inoculation deadline.

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In Canada, 86% of adults are fully inoculated, though that drops under 80% among 18-40 year olds. At least 15 cases of the new Omicron https://www.reuters.com/markets/rates-bonds/canada-has-reported-total-11-cases-omicron-variant-health-official-2021-12-03 variant in Canada have been reported in the past week.

John Cappelli, vice president of onsite managed services in Canada for global recruitment firm Adecco, said half of his clients are mandating vaccines with the other half allowing regular testing for the unvaccinated.

But he expects the Omicron variant will prompt more workplaces to get strict on vaccination, even as they grapple with the tightest job market he’s seen in his 25-year career.

“We are now starting to see our first workplace (COVID-19) cases in five months,” he said.

The number of Canadian job postings on search website Indeed mentioning vaccine requirements has quadrupled since August. (Graphic: Canada job postings and vaccine mandates, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA3/byvrjqrlmve/chart.png)

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In the hard-hit manufacturing sector, where 77% of firms say their top concern is attracting and retaining workers, vaccine mandates are more rare.

Dennis Darby, CEO of Canadian Manufacturers and Exporters, said most of Canada’s factories have operated safely throughout the pandemic. While CME encourages vaccination, “some companies are still using rapid testing if somebody doesn’t want to get vaccinated,” he added.

But companies risk a hit to their reputation if they are overt in efforts to tap into the unvaccinated as a labor pool, said Wojtek Dabrowski, managing partner at Provident Communications.

“If you go out and say, ‘We are intentionally seeking to hire unvaccinated people,’ many customers are equating that with you being anti-science and anti-safety,” said Dabrowski.

(Reporting by Julie Gordon and Steve Scherer in Ottawa, additional reporting by Rod Nickel in Winnipeg and Nichola Saminather in Toronto; Editing by Alistair Bell)

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Israeli firm to sell HSBC Tower in New York for $855 million

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December 5, 2021

By Steven Scheer

JERUSALEM (Reuters) – Israel’s Property and Building Corp said on Sunday it agreed to sell the HSBC Tower building in midtown Manhattan for $855 million to New York-based real estate firm Innovo Property Group, recording a net loss of $45 million.

The Israeli company, which is 63% owned by Discount Investment Corp, said it had also sold property in Israel for 390 million shekels ($123 million).

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Doron Cohen, chief executive of both Property and Building and Discount, said management was focusing on income-producing properties in Israel and that the amount it was receiving from both transactions would allow it to advance this policy.

“We are continuing the policy and examining the possibility of realising additional properties in the United States and in Israel,” Cohen said, noting the sale of the HSBC building came despite “gloomy” predictions over U.S. commercial real estate market.

He cited Tivoli Village, an upscale apartment complex in Las Vegas that opened this year, which may be put up for sale as part of the company’s efforts to boost liquidity and reduce debt.

Along with conglomerate Koor Industries, Property and Building, bought the 30-storey, 80,000 square metre HSBC Tower in 2009 for $353 million. In 2011, Property acquired Koor’s stake in the tower which has an occupancy of 99%, it said. HSBC had bought the building in the 1990s.

Property and Building said the value of the HSBC Tower in its books was $864 million as of Sept. 30. After costs, it said it would record a net loss of $45 million from the sale.

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Completion of the sale is expected by April 1, 2022 subject to Innovo’s right to advance the date while also receiving options to postpone the completion twice for 30 days each.

Property said after the sale it will have a net cash flow of $343 million.

Its shares were 0.7% lower in afternoon trading in Tel Aviv.

($1 = 3.1605 shekels)

(Reporting by Steven Scheer;Editing by Elaine Hardcastle)

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