Bear Market Puts Coinbase CEO’s $3.7B Compensation in Deep Hibernation
Brian Armstrong was once on track for a quick and speedy payday worth billions after Coinbase went public — but not anymore
Canon Boy/Shutterstock.com modified by Blockworks
The crypto bear has bankrupted hedge funds, demolished lenders and outed fraudsters, but one particular crypto billionaire has been uniquely affected by widespread market malaise: Coinbase CEO Brian Armstrong.
Nearly one year before the firm went public, Coinbase awarded its founder the opportunity to unlock a stellar compensation package potentially worth upwards of $3.7 billion — if he leads the company to stock market success.
The lucrative rewards, spread across six tranches, allow Armstrong to scoop up Coinbase shares at a heavily discounted price if certain share price goals are met, echoing Tesla CEO Elon Musk’s historic $50 billion package, albeit on a much smaller scale.
It works like this: Armstrong can in total acquire almost 9.3 million Coinbase shares for $23.46 each if the firm’s stock price trades at or above $400 for 60 consecutive trading days. The shares then represented 3.8% of all Coinbase shares issued and outstanding.
The first share price target was $200 with the goal increasing by $40 every tranche. Armstrong’s premiere unlock is the most lucrative, awarding 34% of the 10-year stock options, with each tranche granting a further 13.2%.
“We believe the performance conditions associated with the 2020 CEO Performance Award are extremely rigorous and appropriately align Armstrong’s incentives with the interests of our stockholders,” Coinbase told the SEC.
Coinbase already gave Armstrong his first tranche in July 2021. The firm went public via a direct listing in April, debuting at $381 per share. Coinbase stock wouldn’t fall below $200 until the following January, allowing Armstrong to hit the 60-day marker with room to spare.
Coinbase stock was worth $250 at the time, so the first set of shares carried a value of about $790 million on the date they were awarded. Armstrong’s spend for the first set would be around $78.5 million. He must hold the stocks for at least one year after they’re vested.
Coinbase stock package or not, Armstrong still worth billions
But Coinbase’s share price has sunk nearly 85% since then, now trading at just under $40. That means Armstrong would need to lead the company to a sustained 500% share price rally before unlocking his next tranche, worth at least $294.4 million (Armstrong purchase price: $30.5 million).
It’s a tough slog for Armstrong, sans a complete reversal of macro conditions and market sentiment. Regulatory headwinds are set to blow hard this year, revenues and trade volumes are falling; Coinbase further reduced its headcount by 18% this week in a bid to slash expenses by a quarter.
Being kept away from billions in potential profit may sting, but Armstrong is likely doing just fine. He also owns around 16% of Coinbase stock, with Forbes currently valuing his fortune at $1.7 billion. Armstrong earns an annual $1 million salary from Coinbase.
Armstrong has also raked in $4 million over the past few months, having sold nearly 89,200 company shares since November, per OpenInsider data compiled by Blockworks.
Not all of that is for houses and lambos, though. The Coinbase co-founder in October pledged to sell 2% of his company stake to fund scientific research and tech startups, starting with life extension unit Newlimit.
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