Brian Armstrong was awarded a very generous stock option plan.
The surge in the price of bitcoin, which increased sixfold between March 2020 and March 2021, has suddenly made some crypto-investors rich. According to CBS, there are now 100,000 bitcoin millionaires in the world, compared to just 15,000 a year earlier.
At least five of them have joined the billionaires’ club, according to Forbes, including Cameron and Tyler Winklevoss, the co-founders of the cryptocurrency exchange Gemini, or Matthew Roszak, an early crypto-evangelist who saw his fortune grow from $300 million to $1.2 billion (about €1 billion) in one year.
But that’s nothing compared to the $15 billion of the CEO of Coinbase, one of the most popular cryptocurrency exchange apps. Brian Armstrong is now one of the 500 richest people in the world, ahead of Snapchat boss Evan Spiegel or Twitter boss Jack Dorsey.
After collecting a monthly salary of 1 million euros in 2020, the neo-billionaire could earn more than $3 billion over the next decade, or nearly $1 million per working day, Bloomberg reports, citing the compensation deal as “one of the most lavish in America.”
The upcoming Coinbase IPO in particular is causing a stir. Founded in 2012, the company has become a cryptocurrency behemoth, thanks to the global bitcoin craze.
In 2020, it had revenues of $1.1 billion and a profit of $322 million. Its valuation is now estimated at $100 billion and its IPO looks like one of the most promising since Facebook’s.
Life of Brian
In August 2020, Brian Armstrong was awarded 9.3 million stock options, or 3.8% of the company’s outstanding stock. With an IPO target of $374 per share, this would put Brian Armstrong in the driver’s seat of a €3.5 billion fortune, with options valid for ten years.
This is of course only the low end of the scale: if the share price continues to rise in the coming years, the fortune made will be even greater.
These head-scratching amounts illustrate the latest trend of directors granting huge bonus share awards to CEOs of companies preparing for IPOs.
According to them, these transactions are necessary to keep the founder at the head of the company, a guarantee of stability. Other recent examples of such outsized compensation include Alex Karp, co-founder and CEO of Palantir Technologies, who will receive more than $1 billion worth of stock options over the next decade.
As for Frank Slootman, the CEO of Snowflake, a cloud-based data hosting startup, he will get stock options valued at about $80 million each month for four years.
For Brian Armstrong, this is of course based on the condition that cryptocurrencies will not have collapsed by then. Between those who predict a million-dollar bitcoin and those like Nouriel Roubini who say “its value is less than zero,” it will be hard for the CEO to anticipate a cushy retirement plan.