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

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

The Baron Capital chairman and CEO said Musk’s compensation contract in 2018 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 when the company was going through what he called ‘production hell!'”

The pay package, proposed by Tesla’s board of directors, has repeatedly come under fire for its close ties with Musk. The package has no salary or cash bonus and sets rewards based on Tesla’s market value rising to as much as $650 billion over the 10 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.

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

Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. Tesla is the biggest holding in Baron’s oldest and biggest fund, Baron Partners Fund (BPTIX), accounting for nearly 30% of the portfolio.

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