Elon Musk’s $1T Pay Package Gets A Thumbs Up From Baron Capital

• Baron Capital’s funds made a small investment in Tesla in 2010 but since then increased holdings, primarily from 2014 to 2016.
• The firm has earned about $8 billion profit realized and unrealized for its Tesla shares. 
• “Tesla’s success and its future are inseparable from Elon,” the investor said. 
   

Baron Capital’s Ron Baron on Tuesday pledged support to Elon Musk’s newly proposed pay package at Tesla (TSLA) worth about $1 trillion.

Ron Baron, whose asset management firm is a Tesla investor, said the proposed pay package is right for the company and its shareholders.

What Does Ron Baron Have To Say?

“Tesla’s success and its future are inseparable from Elon,” the investor said in a post on X, while adding that the package would ensure that Musk continues to lead the EV giant for many years to come.

Baron Capital has been investing in Tesla since 2014 and will be voting for the package, he added. Tesla accounted for 4.3% of Baron Fifth Avenue Growth Fund’s net assets and 33.2% of Baron Partners Fund as of the end of the third quarter.

‘Elon is the ultimate “key man” of key man risk. Without his relentless drive and uncompromising standards, there would be no Tesla,’ Baron wrote in a post on X. He also added that it is unlikely that anyone besides Musk could accomplish the goals outlined in the new CEO compensation plan.

Baron also noted that only one of Baron Capital’s funds made a small investment in Tesla in 2010, but it has since increased its holdings, primarily from 2014 to 2016. The post on X also stated that Baron Capital has earned approximately $8 billion in realized and unrealized profits from its Tesla shares.

Baron Capital has also invested in other Musk companies, including the privately held SpaceX and the AI firm xAI. Musk-related entities represent about 26% of Baron Capital's $44 billion assets under management.

About Musk’s New Package

Tesla proposed a new compensation package for Musk, valued at approximately $1 trillion, in September. According to the new pay plan, Musk will receive no salary but will be awarded up to 423.7 million shares of Tesla in installments over 10 years, contingent upon the company meeting certain milestones, including increases in earnings, vehicle deliveries, robotaxis, and humanoid robots.

The new package is designed to deliver approximately 12% more voting power to Musk in exchange for driving performance growth, including by taking the company’s total market capitalization to $8.5 trillion. Tesla shareholders must now approve the package, and the results of the shareholder vote will be announced at the company’s annual meeting of shareholders on November 6.

Musk’s previous pay package, initially approved in 2018 and valued at over $50 billion, was voided by a Delaware court, which deemed it excessive, last year. Musk appealed the court’s order in March, and Tesla established a special committee to consider matters concerning Musk’s pay, including evaluating a new pay package.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around TSLA stayed within the ‘bearish’ territory over the past 24 hours, while message volume stayed at ‘low’ levels.

TSLA stock is up 13% this year and approximately 89% over the past 12 months. 

Read also: Uber Delivers Solid Earnings, But Tepid Q4 Guidance Sends Stock Lower

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