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Ron Baron Backs Elon Musk’s Massive $56 Billion Remuneration Deal

Image Source: Frederic Legrand - COMEO @ShutterStock

Renowned Tesla investor and multi-billionaire Ron Baron, who has long been an advocate for the company, has voiced his support for CEO Elon Musk’s heavily debated $56 billion compensation arrangement. Baron, the chairman and CEO of Baron Capital, has acknowledged Musk’s pivotal role and the challenging performance milestones built into his reward structure in an open endorsement letter.

“Elon represents the very essence of what we refer to as ‘key man’ risk,” Baron expressed. “His extraordinary ambition and refusal to compromise are what brought Tesla into existence. This is exemplified by his willingness to literally sleep on Tesla’s Fremont factory floor during the most difficult periods of production!”

Introduced by Tesla’s board in 2018, the controversial compensation framework is crafted with stringent performance objectives. Without achieving these tough milestones, Musk would gain nothing from the package, which has garnered scrutiny due to the board’s close association with Musk. It offers no standard salary or cash incentives, instead setting benchmarks tied to an increase in Tesla’s market valuation to $650 billion within a decade.

“If approved, it will stand as the most substantial CEO compensation deal ever seen in corporate U.S. history,” Baron remarked. “I am casting my vote in favor of the compensation deal,” he announced while on CNBC’s “Squawk Box.”

Baron then spoke of the impressive investment returns Baron Capital has realized from Tesla. Since investing in Tesla in 2014, the firm has seen a return of approximately twentyfold. Within the Baron Partners Fund (BPTIX), Tesla constitutes nearly a third of its investment portfolio.

“At Baron Capital, we have a definitive and resounding response: Tesla thrives with Elon. In essence, Elon is Tesla,” Baron asserted in his correspondence.

The upcoming shareholder meeting, set for June 13, will address the proposed compensation arrangement. Faced with obstacles, including a legal ruling that annulled the initial pay plan, Baron remains unshakeable in his backing of Musk’s strategic direction and leadership.

Image Source: Frederic Legrand – COMEO @ShutterStock

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