Remember 2022? For most people in the crypto world, it was a year of brutal corrections and portfolio pain. Bitcoin and the broader market took a nosedive, and the stocks of publicly traded crypto companies followed suit, shedding massive value. If you were holding bags of crypto stocks, you likely felt the sting. It’s natural to assume that the leaders steering these companies were feeling it too. After all, when the ship is taking on water, shouldn’t the captains be getting wet?
Well, a look at the compensation packages for top executives at some of the industry's biggest names tells a different, and for many, a surprising story. While stock prices were doing a downward spiral, executive pay remained remarkably robust. This isn’t about pointing fingers, but about understanding the often confusing world of corporate compensation, especially in a sector as volatile as crypto. Let's break down how some of the top brass at firms like Coinbase, Marathon Digital, and Riot Platforms were compensated during one of the toughest years on record.
Coinbase is arguably the most well known crypto exchange in the United States, a bellwether for the industry's health in public markets. In 2022, its stock (COIN) had a rough ride, plummeting over 80%. You would expect executive pay to reflect such a dramatic downturn. However, the numbers show a more complex picture.
CEO and cofounder Brian Armstrong’s compensation for 2022 came in at a cool $19.4 million. It’s important to note that the vast majority of this wasn't cash in his pocket. It was primarily composed of stock awards, a common practice in tech and public companies designed to align executive interests with long term company performance.
His leadership team also received substantial packages:
Seeing these figures next to an 80% stock decline can be jarring for investors. The rationale from a corporate governance perspective is that these stock awards are part of long term incentive plans. They are meant to keep top talent focused on building the company for the future, not just reacting to the daily or yearly swings of the market. Still, the optics are undeniable and raise questions for shareholders who watched their own investments shrink.
The pain of 2022 wasn't limited to exchanges. Bitcoin mining companies, whose fortunes are closely tied to the price of BTC and energy costs, were hit incredibly hard. Two of the largest players, Marathon Digital and Riot Platforms, saw their stock values evaporate. Yet, their executive compensation committees were still signing off on hefty paydays.
Marathon Digital's stock (MARA) fell by a staggering 89% in 2022. Despite this, CEO Fred Thiel’s compensation package was valued at over $7 million. His team also did quite well. CFO Hugh Gallagher received $3.1 million, Chief Commercial Officer Charlie Schumacher got $2.5 million, and Chief Technology Officer Ashu Swami was awarded $2.2 million. Even board member Douglas Mellinger received a compensation package worth $2.3 million. Like with Coinbase, these packages were heavily weighted with stock and option awards, not just cash salaries.
Riot Platforms (RIOT) experienced a similar fate, with its stock dropping 85%. The executive compensation here was even more eye opening. CEO Jason Les received a total package worth an incredible $21.5 million. His colleagues also secured massive awards. General Counsel William Jackman was compensated with $13.6 million, and CFO Colin Yee received $13.5 million. These are staggering numbers for a company whose market valuation had just been decimated. It highlights a significant disconnect between short term market performance and the reward structures set up for the people in charge.
Not every company followed the exact same script. Galaxy Digital, the crypto financial services firm led by the well known Mike Novogratz, also had a difficult year. Its stock fell by 81%. However, Novogratz’s own compensation showed a more direct link to the company’s performance.
His pay dropped from $21 million in the bull market of 2021 to a more modest, yet still substantial, $7 million in 2022. This suggests a compensation structure that may be more reactive to market conditions. Even so, his leadership team was well compensated. President Christopher Ferraro took home $3.6 million, and CFO Alex Ioffe received $2.9 million. So, while there was an adjustment at the very top, the executive team was still well insulated from the financial winter that froze the rest of the market.
So, what gives? How can executives receive millions while their companies' stocks are in freefall? The answer lies in the structure of corporate compensation. Most of these large figures are not cash salaries but long term incentive plans based on stock and option awards granted by the board of directors.
These plans are designed to retain top tier talent and incentivize them to build value over many years, not just one quarter or one year. The idea is that a great leader is essential for a company's survival and eventual success, especially through tough times. Paying them competitively, the argument goes, prevents them from jumping ship to a competitor.
However, this practice creates a stark contrast that can be tough for everyday investors to stomach. When you've lost a significant portion of your investment, seeing multi million dollar packages being awarded can feel unfair. It sparks a necessary conversation about corporate governance in the crypto industry. Are these compensation models truly aligned with shareholder interests, or do they protect the leadership class at the expense of everyone else? As the crypto market matures, expect these questions to become louder and more insistent.
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