Tesla CEO Elon Musk's bid for more pay gets a billionaire's backing

A billionaire shareholder is backing Tesla CEO Elon Musk's bid for a bigger payday. Ron Baron, chairman and CEO of Baron Capital, whose funds own Tesla (TSLA) stock, writes “Elon is the ultimate ‘key man’ of key man risk. Without his relentless drive and uncompromising standards, there would be no Tesla... If shareholders want to protect and grow their investment, they must AGAIN approve his compensation contract."

Yahoo Finance's Pras Subramanian explains why Baron's backing is a big deal for Musk.

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This post was written by Stephanie Mikulich.

Video Transcript

With one week to go until Tesla shareholder meeting billionaire investor, Ron Barron is throwing his support behind Ceo Elon Musk's controversial pay package.

Our pros Romani joins us now with more so here out of nowhere.

Well, not out of nowhere.

I mean, we know who Ron Baron is but you know, a little bit of a surprise entrance into this whole debate.

Yeah, I think he felt he needed to kind of weigh in on here.

So he's all in on E Elon here.

I mean, look, he's made a lot of money with, with his Tesla investment and, and he claims that Elon is the reason why uh saying that quote in his letter, in an open letter, he says, quote, Elon is the ultimate key man of key man risk without his relentless drive and uncompromising standards, there would be no Tesla.

So not surprising that um he is weighing in on here.

I mean, look, he said in a note in March on an investment sort of uh thesis kind of back up the Tesla investment saying that they made what $5.5 billion on a original $400 million investment back in 2014, 2016.

So clearly he's enjoying his gains here.

Now, things have kind of come off a little bit recently for Tesla, but I think Baron is still on the camp and he's still all in on Elon real quick.

Do people think that this is going to be some cataclysmic event if the shareholder vote goes the wrong way and quotes whatever side you're on?

Like could this end up being something that's causes a lot of um turmoil?

Yeah, I think there's concern that this vote results gonna have some volatility around the stock.

Uh Morgan Stanley did a kind of informal poll of their institutional clients and Adam Jonas wrote about how uh ma many believe that if the pay package is approved, it'll be a positive for the stock.

But if it's, if it's actually rejected, it could be a huge negative for the stock uh in the near term.

So I think there's some concern next week ahead of this uh shareholder vote.

All right.

Thank you for that update pro.