CEO Armstrong got $6.3m for security

Coinbase CEO Brian Armstrong received $6.3 million in security benefits last year, more than triple the amount his security cost the company the year before, according to an SEC disclosure.

In 2021, security for Armstrong cost $1.9 million. The company’s executive compensation summary, published last month, did not explain the increase.

It is not surprising that Armstrong would need security services. The crypto world is rife with hackers, criminals and thieves and Armstrong’s wealth is well-documented. He made $292 million from stock sales in the weeks after the company went public in 2021.

Armstrong’s total compensation was $7.5 million in 2022, the SEC filing says. He took a flat salary of $1 million and the rest was security costs and legal costs. He took the same base salary in 2021 and 2020.

Most of Armstrong’s wealth comes from his holdings and sales of Coinbase stock. In addition to the money he made when the company went public, he also received $56.7 million in option awards (as valued in 2020) and continues to hold 39 million shares in the company which at today’s price would be worth $2.4 billion if sold. (Armstrong would net less than that after paying the cost of the options, which are priced variously at either $18.71 or $23.46 on shares that currently trade above $60).

Nonetheless, his security bill is high. By comparison, Pfizer CEO Albert Bourla received $800,687 in security benefits last year and Goldman Sachs chief David Solomon received $305,077. It is not as high as Meta boss Mark Zuckerberg’s however — the Facebook founder receives $14 million a year for security (but only draws a salary of $1).

Brian Armstrong’s compensation is mostly stock

It is difficult to assess how Coinbase’s executive compensation compares to peers at other exchanges like the privately owned Binance, because only Coinbase has gone public in the U.S., where the disclosure regime requires a high level of transparency. A representative for Coinbase declined to elaborate on the compensation disclosure.

All of Armstrong’s senior colleagues received more annual compensation in 2022 than he did, according to the disclosure:

Coinbase executives and their total compensation in 2022 vs 2021:

• CEO Brian Armstrong: $7,465,350, up from $3,267,027
• COO Emilie Choi: $23,499,963, up from $1,220,176
• CFO Alesia Haas: $11,967,321, down from $16,217,843
• CPO Surojit Chatterjee: $20,726,528, up from $925,789
• CLO Paul Grewal: $7,473,148, up from $711,900

The vast majority of their compensation came in the form of stock and option awards. All five executives take $1 million or less in cash salary.

Here’s the detail from the compensation table:

A rough year for Coinbase

Coinbase had a tough year in 2022. Revenue declined to $3.2 billion, down 59%. The company lost $2.6 billion on the bottom line, compared to a profit of $3.2 billion the year before. And the stock fell 86%, from more than $252 a share to less than $36 over the year.

Compensation at Coinbase generated controversy recently when the company was sued by an investor who claims that top executives timed the release of bad news about the business after they began selling stock when the company went public.

“As the most popular and only publicly traded crypto exchange in the U.S., we are at times the target of frivolous litigation. This is an example of one of those meritless claims,” a Coinbase representative told The Block at the time.

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