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Billionaire investor Ron Baron, a prominent Tesla shareholder and long-time supporter, has publicly endorsed CEO Elon Musk’s controversial $56 billion pay package. In an open letter, the chairman and CEO of Baron Capital highlighted Musk’s exceptional contribution to Tesla and the ambitious performance goals set in his compensation contract.
“Elon is the ultimate ‘key man’ of key man risk,” Baron stated. “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 2018 compensation package proposed by Tesla’s board of directors is designed with aggressive performance metrics. If these ambitious goals were not met, Musk would have earned nothing. The package, which has faced criticism for the board’s perceived close ties to Musk, does not include a salary or cash bonus. Instead, it sets rewards based on Tesla’s market value rising to $650 billion over ten years.
“If passed, it would be the largest pay package for a CEO in corporate America,” Baron noted. “I’m voting for the pay package,” he declared during an appearance on CNBC’s “Squawk Box.”
Baron also highlighted the significant return on investment his firm has seen from Tesla. Since first investing in the company in 2014, Baron Capital has seen about 20 times its initial investment. Tesla remains the largest holding in the 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 emphasized in his letter.
The shareholder meeting, where the pay package will be discussed, is scheduled for June 13. Despite challenges, including a recent court decision voiding the original pay package, Baron remains steadfast in his support for Musk’s leadership and vision.
