Prominent investor Ron Baron has thrown his support behind Tesla CEO Elon Musk’s proposed $56 billion pay package, which shareholders will vote on next week. This means that Baron is in favor of Musk getting a lot of money as part of his employment contract.
Why it is important:
Musk’s big payday, which was agreed to in 2018 but was canceled by a judge earlier this year, is causing a lot of discussion. Musk and Tesla’s board of directors say this money, awarded primarily in the form of company stock if Tesla meets certain goals, is a way to ensure Musk continues to work hard to grow Tesla.
However, some people who own Tesla shares believe this is too much money for Musk. Two companies that advise shareholders, ISS and Glass Lewis, have told them to say no to the plan as it stands now.
Key idea:
“Elon is like the main person at Tesla. Without him working hard and having high standards, Tesla wouldn’t be what it is,” Baron said.
Background:
Musk does not receive a regular salary; instead, he is paid with company stock, as seen in official Tesla documents.
Some people support the big payday Musk was promised in 2018. They say it’s fair because Musk has helped Tesla become the most valuable car company in the world, worth more than ten times that of General Motors.
But Tesla faces some problems. Fewer people are buying electric cars because interest rates are high and there are more companies now making electric cars. Tesla recently laid off more than 10% of its workers and lowered prices on some cars to deal with this.
What’s next?
Tesla shareholders will decide whether to accept Musk’s pay plan during their annual meeting on June 13.
Also read: Tesla investor sues Elon Musk over $7.5 billion stock sale