Billionaire investor Ron Baron, a Tesla shareholder, has spoken publicly about the controversial payment of a salary package of 56 billion dollars (51.5 billion euros) to the owner of the car firm, Elon Musk. In an open letter, Baron claims that Musk’s 2018 contract included “aggressive” profitability targets that few believed could be achieved. Musk would not have earned anything if these ambitious goals had not been met, he points out, as reported by CNBC.
“Without their relentless drive and uncompromising standards, there would be no Tesla. Especially considering how he slept on the floor of the Tesla factory in Fremont when the company was going through what he called ‘production hell!’” the Baron Capital president adds.
“At Baron Capital, our answer is clear, loud and unequivocal: Tesla is better with Elon. “Tesla is Elon,” he stated.
Although his official salary is zero, the Tesla CEO receives bonuses based on certain company objectives. Musk’s pay package, proposed by Tesla’s board, has been criticized by some shareholders. The package does not include any salary or cash bonus and establishes bonuses based on the increase in Tesla’s market value up to $650 billion in the 10 years after 2018. If approved, it would be the largest salary package received by a CEO in the US business world. Tesla’s shareholder meeting is scheduled for June 13.
In January, a Delaware judge ruled in favor of a small investor who denounced the payment of $56 billion to Musk. The investor, who only owned nine shares of the electric vehicle manufacturer, sued the firm in 2018 for “excessive and unjustified enrichment.”
Baron previously noted that his firm has gained about 20 times its investment in Tesla since it first bought shares in 2014. Tesla represents the largest investment in Baron’s largest and oldest fund, Baron Partners Fund, which accounts for nearly 30% of the portfolio.
Follow all the information Five days in Facebook, x and Linkedinor in our newsletter Five Day Agenda
Newsletters
Sign up to receive exclusive economic information and the financial news most relevant to you
Sign up!
