Billionaire investor Ron Baron, a long-time Tesla advocate and shareholder, has voiced strong support for CEO Elon Musk’s contentious $56 billion pay package in an open letter. Baron, who serves as the chairman and CEO of Baron Capital, emphasized the challenging performance metrics included in Musk’s 2018 compensation contract, which many believed were unattainable. He highlighted that Musk would have received no compensation had these ambitious goals not been met.
“Elon is the ultimate ‘key man’ of key man risk,” Baron wrote. “Without his relentless drive and uncompromising standards, there would be no Tesla. Especially considering how he slept on the floor of Tesla’s Fremont factory when the company was going through what he called ‘production hell!’”
The pay package, put forth by Tesla’s board of directors, has faced substantial criticism, with detractors arguing that the board is too closely linked to Musk to be fully impartial. The package offers no salary or cash bonus and ties rewards to Tesla’s market value rising to as much as $650 billion over a decade from 2018. If approved, it would mark the largest compensation package for a CEO in corporate America. Tesla’s shareholder meeting to vote on the package is scheduled for June 13.
“I’m voting for the pay package,” Baron stated.
Earlier this year, Judge Kathaleen McCormick of Delaware’s Court of Chancery voided the original pay package, prompting Musk to seek moving Tesla’s state of incorporation from Delaware to Texas.
Baron has previously disclosed that his firm has realized approximately 20 times its investment in Tesla since first purchasing the stock in 2014. Tesla remains the largest holding in Baron’s oldest and biggest fund, Baron Partners Fund (BPTIX), comprising nearly 30% of the portfolio.
“At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon,” Baron affirmed in his letter.
Baron’s endorsement underscores his belief in Musk’s unparalleled leadership and vision for Tesla. As the shareholder vote approaches, his public support may influence other investors’ decisions on this pivotal issue.
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