Prominent investor Ron Baron has come out in support of Tesla (NASDAQ:) CEO Elon Musk’s $56 billion pay package that will go to a shareholder vote next week, according to an open letter from the Baron Capital founder on Tuesday.
WHY IS IT IMPORTANT
Musk’s huge salary, approved in 2018 but overturned by a Delaware judge earlier this year, remains controversial.
Musk and Tesla’s board of directors argue that compensation, primarily in the form of stock bonuses tied to Tesla achieving certain goals, ties executive incentives to Tesla’s growth.
However, some shareholders consider the package excessive. Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have called on shareholders to vote against the bill in its current form.
KEY QUOTE
“Elon is the ultimate ‘key man’ in the risk space,” Baron said. “Without his tireless drive and uncompromising standards, there would be no Tesla.”
CONTEXT
The billionaire receives no salary and is compensated in the form of stock, Tesla filings show.
Some shareholders are pushing for the 2018 award, the largest for a CEO in corporate America, citing Musk’s track record of making Tesla the world’s most valuable auto company with a market capitalization more than 10 times that of General Motors (NYSE:).
However, the automaker faces pressure as electric vehicle sales have slowed due to high interest rates and increased competition. The company recently laid off more than 10% of its workforce and cut prices on some of its vehicles.
WHAT’S NEXT
Tesla shareholders will vote on Musk’s salary at their annual meeting, scheduled for June 13.