Prominent investor Ron Baron has come out in support of Tesla CEO Elon Musk's $56 billion pay package, which is up for a shareholder vote next week, according to an open letter from the Baron Capital founder on Tuesday.

WHY IT'S IMPORTANT

Musk's enormous pay, approved in 2018 but voided by a Delaware judge earlier this year, remains contentious.

Musk and the Tesla board have argued that the compensation, primarily in stock awards tied to Tesla achieving specific milestones, ties executive incentives to growth at Tesla.

However, some shareholders view the package as excessive. Proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis have urged shareholders to vote against it in its current form.

KEY QUOTE

"Elon is the ultimate 'key man' of key man risk," Baron said. "Without his relentless drive and uncompromising standards, there would be no Tesla."

CONTEXT

The billionaire does not take a salary and is compensated through stock awards, Tesla filings show.

Some shareholders have argued for the 2018 award, the largest for a CEO in corporate America, citing Musk's track record of making Tesla the world's most-valuable car company with a market cap over 10 times that of General Motors.

However, the car maker faces pressure as EV sales have slowed down due to high interest rates and heightened competition. It recently cut over 10% of its workforce and has lowered prices for some of its cars.

WHAT'S NEXT

Tesla shareholders will vote on Musk's pay at their annual meeting scheduled on June 13.