1. In a small saucepan, combine sugar and water. Mix to combine, then place over medium–high heat. Do not mix again.
2. Cook, swirling the pot, until caramel is a light brown color. Remove from heat and slowly whisk in cream and vanilla. It will boil vigorously.
3. Return caramel to low heat and stir in butter. Keep stirring until butter melts and caramel is smooth and creamy. Remove from heat and stir in salt.