Ron Baron, Tesla’s major shareholder, supports Elon Musk’s $56 billion pay package

Billionaire investor Ron Baron, for years Tesla bull and shareholder, wrote an open letter in support of CEO Elon Musk’s controversial $56 billion pay package.

Baron Capital’s chairman and CEO said Musk’s 2018 compensation contract included “aggressive” performance metrics that few believed could be achieved. Musk would have earned nothing if these ambitious goals had not been met, he said.

“Elon is the ultimate ‘key man’ of key man risk,” Baron said in the letter. “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 as the company went through what he called ‘production hell!'”

The pay package, proposed by Tesla’s board of directors, has repeatedly come under fire, including criticism that the board is too closely tied to Musk to be fully independent. The package does not include a salary or cash bonus and sets rewards based on Tesla’s market value, which could reach as much as $650 billion ten years from 2018.

If passed, it would be the largest pay package for a CEO in corporate America. Tesla’s shareholder meeting is scheduled for June 13.

“I’m voting for the pay package,” Baron said Wednesday on CNBC’s “Squawk Box.”

In January, Judge Kathaleen McCormick of the Court of Chancery in Delaware overturned the original pay package. Musk then attempted to move Tesla’s state of incorporation from Delaware to Texas.

Baron previously revealed that his company has invested about 20 times more in Tesla since he first bought the stock in 2014. Tesla is the largest holding in Baron’s oldest and largest fund, Baron Partners Fund (BPTIX), accounting for nearly 30% of the shares. the wallet.

“At Baron Capital, our answer is clear, loud and unequivocal: Tesla is better with Elon. Tesla is Elon,” he said in the letter.