Billionaire investor Ron Baron, a longstanding advocate for Tesla (TSLA) and its CEO Elon Musk, has expressed strong support for Musk’s controversial $56 billion pay package in an open letter. Baron, the chairman and CEO of Baron Capital, emphasized that Musk’s compensation contract from 2018 was laden with “aggressive” performance metrics that many doubted could be achieved. Baron pointed out that Musk would have received nothing had these ambitious goals not been met.<\/p>\n\n\n\n
“Elon is the ultimate \u2018key man\u2019 of key man risk,” Baron stated. “Without his relentless drive and uncompromising standards, there would be no Tesla.” He referenced Musk’s intense commitment during challenging times, including Musk sleeping on the floor of Tesla\u2019s Fremont factory during a period he described as “production hell.”<\/p>\n\n\n\n
The pay package, crafted by Tesla\u2019s board of directors, has faced significant criticism, particularly due to concerns over the board’s close ties to Musk, potentially compromising its independence. The package includes no salary or cash bonus, instead setting rewards based on Tesla’s market value rising to as high as $650 billion over ten years from 2018. If approved, it would mark the largest pay package for a CEO in corporate America. Tesla’s shareholder meeting to discuss this matter is scheduled for June 13.<\/p>\n\n\n\n
“I’m voting for the pay package,” Baron declared during an appearance on CNBC’s “Squawk Box.”<\/p>\n\n\n\n
Earlier this year, Judge Kathaleen McCormick of Delaware\u2019s Court of Chancery voided the original pay package, prompting Musk to consider relocating Tesla\u2019s state of incorporation from Delaware to Texas.<\/p>\n\n\n\n
Baron also revealed that his firm has seen a substantial return on its investment in Tesla, multiplying its initial investment about 20 times since first acquiring the stock in 2014. Tesla remains the largest holding in Baron\u2019s flagship fund, Baron Partners Fund (BPTIX), constituting nearly 30% of its portfolio.<\/p>\n\n\n\n
“At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon,” Baron concluded in his letter.<\/p>\n\n\n\n