DEF 14A of Riot Platforms, Inc.
Filed Apr 29, 2024 · FY20230001558370-24-006123
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our business operates under the direction of the Board, three of whom are independent. Pursuant to our Bylaws, our Board is divided into three approximately equal in size classes, with staggered three-year terms. Thus, at each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring. The Governance and Nominating Committee (“Governance Committee”) and the Board have unanimously fixed the size of the Board at five directors, with one director designated as a Class I director, two directors designated as Class II directors, and two directors designated as Class III directors. The Class III director seats on the Board are up for election at this Annual Meeting, Class I director seat is up for election at the 2025 Annual Meeting, and the Class II director seats are next up for election at the 2026 annual stockholders’ meeting. The Governance Committee and the Board have unanimously nominated and hereby recommend to the stockholders for their approval at the Annual Meeting the following director nominees for election to the Board:
Director Nominees
Director Nominees
Director Nominees
| Name | Age | Director since | | Benjamin Yi | 42 | 2018 | | Jason Les | 38 | 2017 |
Director Nominees
Information relating to the nominees for election as director and for each continuing director, including period of service as a director of the Company, principal occupation, skill, experience and other biographical material, is shown later in this Proxy Statement. Mr. Yi and Mr. Les have consented to stand for election as Class III directors; and we have no reason to believe that either is unable or will decline to serve as a director if elected. Although the Company knows of no reason why Mr. Yi or Mr. Les could not serve as a director, if either is unable to serve or is unwilling to serve, the accompanying proxy will be voted for a substitute nominee. Each director nominee, if elected, will serve until the expiration of their term and until a successor is named and qualified, or until their earlier resignation, death or removal. As provided by our Bylaws, should a director die, resign or otherwise be removed from office prior to the expiration of his or her term of office, the remaining directors may appoint an interim director to fill the resulting vacancy on the Board until a successor is duly qualified and elected by the stockholders following the expiration of the term of office.
INFORMATION REGARDING DIRECTORS
INFORMATION REGARDING DIRECTORS The information set forth in the following table is current as of the date of this Proxy Statement, of the individuals who currently serve as directors on the Board.
INFORMATION REGARDING DIRECTORS
| Name of Director | Age | Director Since | Independent | Audit Committee | Compensation and Human Resources Committee | Governance and Nominating Committee | | Benjamin Yi | 42 | 2018 | | | | | | Jason Les | 38 | 2017 | | | | | | Hubert Marleau | 80 | 2020 | ✔ | | ✔ | | | Hannah Cho | 46 | 2021 | ✔ | ✔ | | ✔ | | Lance D’Ambrosio | 66 | 2021 | ✔ | | ✔ | ✔ |
INFORMATION REGARDING DIRECTORS
| ✔ | Committee Member |
INFORMATION REGARDING DIRECTORS
| | Committee Chair |
INFORMATION REGARDING DIRECTORS
| | Audit Committee financial expert |
Nominees for Class III Directors (Terms Expiring in 2027)
Nominees for Class III Directors (Terms Expiring in 2027)
Nominees for Class III Directors (Terms Expiring in 2027)
| | Mr. Yi brings almost two decades of unique capital markets experience to the Company, and a particular expertise in fintech, specialty finance, and investing throughout a company’s capital structure. Mr. Yi leverages his expertise in capital markets and corporate development as a Board member to help shape Board discussions and strategic policymaking decisions as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. In addition, his service on other private and public company boards brings valuable experience to our Board. | | Age: 42 Director Since: 2018 Committees: None Other Public Company Board Service: None | Benjamin Yi, age 42, has served as our Executive Chairman since May 2021, as a member of the Board since October 2018, and as Chairman of the Board from November 2020 through May 2021. In this role, he is directly involved in our day-to-day operations, playing a key role in setting and fulfilling the Board’s strategic aims for the Company. Mr. Yi brings significant corporate governance experience to the Board and executive management team, having served as an independent director and committee chair of several private and public companies. As Executive Chairman of the Board, Mr. Yi serves as both Board chair and as an executive officer of the Company. The Board determined to appoint Mr. Yi as Executive Chairman to better allow the Company to leverage his considerable knowledge of the Company, leadership abilities, and corporate governance, executive and capital markets experience to help the Company carry out the strategic initiatives set by the Board. Mr. Yi previously served as a member of each of the Board’s three standing committees, however, as of May 24, 2021, upon his appointment as the Company’s Executive Chairman, Mr. Yi resigned from all committee positions. As Executive Chairman, Mr. Yi plays an integral role in establishing the Board’s strategic vision for the Company and, except when the Company’s Bylaws, the Nasdaq Rules, the rules and regulations of the SEC, or Nevada law require him to abstain from the meeting, serve as Board chair. Mr. Yi brings significant corporate governance experience to the Board, having served as an independent director and committee chair of several private and public companies. Prior to joining the Board, Mr. Yi served as an Independent Director and Chair of the Corporate Governance and Remuneration Committee of PetroMaroc Corporation, plc (formerly TSX-V: PMA), a Jersey, UK-based energy company, from December 2013 to December 2016; as a member of the Board of Managers and Audit Committee of Android Industries, LLC, a privately held Michigan-based assembler of complex modules for the automotive industry, |
Nominees for Class III Directors (Terms Expiring in 2027)
| | from January 2014 to September 2016; and as an Independent Director, member, and occasional Chair of the Audit Committee of Woulfe Mining Corp. (formerly TSX-V: WOF), a Vancouver-based mining company, from October 2013 to its acquisition in September 2015. Prior to his appointment as our Executive Chairman, Mr. Yi led capital markets and corporate development from January 2017 through May 2021 at IOU Financial Inc. (formerly TSX-V: IOU), a Montreal-based fintech-enabled lender to North American small businesses which was privatized by Neuberger Berman in 2023. Previously, Mr. Yi worked directly under the late Ned Goodman, a renowned Canadian financier, investor, and founder of Dundee Corporation (TSE: DC.A; OCTMKTS: DDEJF), a Toronto-based conglomerate primarily focused on the natural resources sectors. At Dundee Corporation, he worked in a corporate development and investment capacity, investing throughout the capital structure of companies involved in the natural resource extraction, energy technology, real estate, and automotive sectors. Prior to Dundee Corporation, Mr. Yi was a securities analyst at the predecessor to 1832 Asset Management L.P., where he covered energy and special situations investments as part of a team managing one of North America’s largest natural resources-focused investment funds. Mr. Yi holds a Bachelor of Commerce, specialist in Finance, major in Economics from University of Trinity College and a Master of Finance from University of Toronto – Rotman School of Management. He is a CFA charter holder and member of the CFA Society Cayman Islands. Expertise: Mr. Yi brings two decades of unique capital markets and investment experience to the Company, and a particular expertise in fintech, specialty finance, and investing throughout a company’s capital structure. Mr. Yi leverages his expertise in corporate governance, capital markets, and corporate development as a Board member to help shape Board discussions and strategic policymaking decisions as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. In addition, his service on other private and public company boards brings valuable experience to our Board. | | Age: 38 Director Since: 2017 Committees: None Other Public Company Board Service: None | Jason Les, age 38, has served as a director on the Company’s Board since November 2017 and has served as our Company’s Chief Executive Officer since February 8, 2021. As a Board member Mr. Les has served on each of the Board’s three standing committees and as Chair of the Compensation Committee. Mr. Les is the driving force behind the Company’s mission to become one of the most relevant and significant companies supporting the Bitcoin network. He has been deeply involved with Bitcoin since 2013, with significant experience in cryptocurrency mining, as an engineer studying protocol development, and contributing to open-source projects. From May 2017 to November 2020, Mr. Les was a founding partner of Binary Digital, a software-development company, where he led the engineering team and coordinated project development for artificial intelligence, reverse engineering, and inter-software compatibility projects. Additionally, his background includes over a decade of unique experience as a former professional heads-up poker player, during which he has successfully competed in high-stakes games online, in addition to the most prestigious, high-stakes tournaments in the world. In 2015 and 2017, he was selected as a human benchmark for testing the world’s best poker artificial intelligence in what was dubbed “Man vs Machine” at Carnegie Mellon University. |
Nominees for Class III Directors (Terms Expiring in 2027)
| Mr. Les holds a Bachelor of Science, Computer Science from the University of California, Irvine. Expertise: Mr. Les possesses extensive knowledge of the Company, gained through his service as its Chief Executive Officer and, before that, as a director on the Board, and because he has been an active participant in the cryptocurrency industry since 2013. Mr. Les brings technical expertise regarding Bitcoin mining, an astute understanding of the overall Bitcoin industry and his commitment to educating the public about Bitcoin and Bitcoin mining, to Board discussions and strategic policymaking decisions that help the Board establish, oversee and improve Company policies designed to drive growth of the Company and protect stockholder interests. |
Class II Directors (Terms Expiring in 2026)
Class II Directors (Terms Expiring in 2026)
Class II Directors (Terms Expiring in 2026)
| ❖ ❖ ❖ | Ms. Cho brings extensive experience in the enterprise technology industry, and significant knowledge and expertise in the marketing and communications aspects of the enterprise technology space to establish policies and strategies assisting the Company in navigating its public discourse regarding the Bitcoin mining industry. Ms. Cho leverages her executive leadership experience, as well as her marketing and communications expertise in the enterprise technology space during Board discussions and strategic policymaking decisions to assist the Board as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. | | Age: 46 Director Since: 2021 Committees: ❖ Compensation Committee ❖ Audit Committee ❖ Governance Committee Other Public Company Board Service: None | Hannah Cho, age 46, has served as a director on the Company’s Board, and as a member of each of its three standing committees since February 2021. Ms. Cho currently serves as Chair of the Compensation Committee. The Board has affirmatively determined that Ms. Cho meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation Committee. Ms. Cho is a veteran marketing and communications professional with a career of over fifteen years in the enterprise technology industry. She brings significant executive leadership experience in the enterprise technology brand marketing, product and corporate communications fields, which she gained at leading technology companies including Anaplan, CA Technologies, Intel Corporation and Cisco Systems. She has leveraged her experience to assist global, multinational organizations across all stages of the business life-cycle, from growth and expansion, to rebranding efforts, to M&A, IPO and divestiture. Currently, Ms. Cho is Vice President, Marketing Communications at BMC Software, a portfolio company of KKR which offers software and services to support cloud computing, IT service management, automation, IT operations, and the mainframe for digital transformation. Prior to BMC Software, she was Senior Vice President, Technology Communications at Edelman, a Chicago-based global public relations and marketing consultancy firm. Ms. Cho holds an Honours Bachelor of Arts, Criminology from Carleton University. Expertise: Ms. Cho brings extensive experience in the enterprise technology industry and significant knowledge and expertise in the marketing and communications aspects of the enterprise technology space to establish policies and strategies assisting the Company in navigating its public discourse regarding the Bitcoin mining industry. Ms. Cho leverages her executive leadership experience, as well as her marketing and communications expertise in the enterprise technology space during Board discussions and strategic policymaking decisions to assist the Board as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. |
Class II Directors (Terms Expiring in 2026)
| Age: 66 Director Since: 2021 Committees: ❖ Audit Committee ❖ Compensation Committee ❖ Governance Committee Other Public Company Board Service: None | Lance D’Ambrosio, 66, has served as a director on the Company’s Board, including as a member of each of its three standing committees, since May 2021. Mr. D’Ambrosio currently serves as the Chair of the Audit Committee. The Board has affirmatively determined that Mr. D’Ambrosio meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation Committee. Further, based on his experience and financial expertise described below, the Board has determined that Mr. D’Ambrosio qualifies as an “audit committee financial expert” (as that term is defined in Item 407(d) of Regulation S-K) and has designated him as one of two audit committee financial experts presently serving on the Audit Committee. Mr. D’Ambrosio has over thirty years’ of experience as a corporate officer and director, including in corporate governance, capital raising, financial analysis, mergers and acquisitions, and complex international structuring. Mr. D’Ambrosio currently serves as the Managing Partner of 4 D Investments, a company which focuses on technology and real estate investments. Prior to 4 D Investments, Mr. D’Ambrosio served as the chief executive officer and chairman of the board of directors of Crystal Peak Minerals, a Canadian public company focused on precious metals mining, from 2010 to 2018. As a corporate executive, Mr. D’Ambrosio has founded and grown numerous companies spanning several industries including the telecommunications, materials and automotive sectors. Over the course of his career, he has led capital raising efforts totaling hundreds of millions of dollars, executed on over thirty corporate acquisitions, successfully taken a number of companies public on both U.S. and international exchanges and successfully sold several businesses to larger market participants, including Sprint Telecommunications and Comsat International, a subsidiary of Lockheed Martin. He also has significant experience as an entrepreneur, having founded several companies spanning a broad spectrum of industries, including the telecommunications, materials, and automotive sectors. Mr. D’Ambrosio has been recognized as a recipient of the Ernst & Young and Merrill Lynch Entrepreneur of the Year Award in the category of e-Software & Services, and he holds Bachelor of Science, Marketing and Bachelor of Science, Management from the University of Utah, where he graduated in 1979 as a member of the Dean’s Honor List. Expertise: Mr. D’Ambrosio brings his extensive experience as a corporate executive, entrepreneur and director to our Board. He is able to leverage his substantial corporate governance and finance experience during Board discussions and strategic policymaking decisions to help the Board establish, oversee and improve Company policies designed to drive growth of the Company and protect stockholder interests. |
Class I Director (Term Expiring in 2025)
Class I Director (Term Expiring in 2025)
Class I Director (Term Expiring in 2025)
| ❖ ❖ ❖ | Mr. Marleau has extensive corporate governance and public company board experience, and he brings over five decades of dedicated financial markets and economics experience to the Board. He brings his extensive experience and expertise to Board discussions and policymaking decisions, helping to assist the Board shape its strategic vision for the Company and as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. | | | Hubert Marleau, age 80, has served on our Board since November 2020 and currently serves as the Board’s Lead Independent Director and Chair of the Board’s Governance Committee. As the Board’s Lead Independent Director, Mr. Marleau chairs those Board meetings from which our Executive Chairman, Mr. Benjamin Yi, is required to abstain from the meeting under the Company’s Bylaws, the applicable rules and regulations of the Nasdaq Rules, the rules and regulations of the SEC, or Nevada law, as applicable. The Board has affirmatively determined that Mr. Marleau meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation Committee. Further, based on his experience and financial expertise described below, the Board has determined that Mr. Marleau qualifies as an “audit |
Class I Director (Term Expiring in 2025)
| Age: 80 Director Since: 2020 Committees: ❖ Governance Committee ❖ Audit Committee ❖ Compensation Committee Other Public Company Board Service: 2 | committee financial expert” (as that term is defined in Item 407(d) of Regulation S-K) and has designated him as one of two audit committee financial experts presently serving on the Audit Committee. Mr. Marleau is a veteran capital markets professional, corporate director and Chair of the Marleau Lecture Series on Economic and Monetary Policy at the University of Ottawa. Mr. Marleau’s broad areas of expertise include macroeconomic policy & analysis, corporate governance, financial analysis and investment banking, having served on the board of directors for more than fifty U.S. and Canadian publicly traded companies throughout his career. Presently, Mr. Marleau serves as a member of the board of directors of Niocan, Inc. (TSX-V: NIO; OCTMKTS: NIOCF), a Montreal, Canada-based metals and minerals mining company, and of Premier Health of America Inc. (TSX-V: PHA), a Blainville, Québec-based specialized healthcare staffing and outsourcing services company, where he serves as president of its audit committee. Mr. Marleau also has extensive capital markets experience, having raised funds privately and publicly for hundreds of emerging and mature companies, structured numerous mergers and acquisitions and acted as the driving force behind numerous transactions throughout his career. Currently, he serves as Chief Economist at Palos Management, a Montreal, Canada-based boutique investment management firm he co-founded. In addition to a career in the capital markets that has spanned over five decades, Mr. Marleau has previously served as a Governor of the Toronto, Montreal and Vancouver stock exchanges, as a Director of the Listing Committee for the Toronto Stock Exchange and as Director of the Investment Dealers Association of Canada (now known as IIROC). Mr. Marleau holds an Honours Bachelor of Social Sciences, Economics from the University of Ottawa. Expertise: Mr. Marleau has extensive corporate governance and public company board experience, and he brings over five decades of dedicated financial markets and economics experience to the Board. He brings his extensive experience and expertise to Board discussions and policymaking decisions, helping to assist the Board shape its strategic vision for the Company as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. |
Board’s Role in Corporate Governance Matters
| ● | Rules regarding the role and responsibilities of the Board and of each individual director, including director compensation, orientation, and continuing education standards; |
Evaluating Director Nominees
Evaluating Director Nominees As specified in our Corporate Governance Guidelines, we seek directors with the highest standards of ethics and integrity, sound business judgment, and the willingness to make a strong commitment to the Company and its success. The Governance Committee works with the Board on an annual basis to determine the appropriate and desirable mix of characteristics, skills, expertise, and experience for the full Board and each committee, taking into account both existing directors and all nominees for election as directors, as well as diversity considerations and the membership criteria reflected in the Corporate Governance Guidelines. The Governance Committee and the Board consider diversity in a broad sense when evaluating board composition and nominations and have outlined their commitment to diversity in the Company’s Board Diversity Policy. The Governance Committee seeks to include directors with a diversity of experience, professions, viewpoints, skills, and backgrounds that will enable them to make significant contributions to the Board and the Company, both as individuals and as part of a group of directors. The Board evaluates each individual in the context of the full Board, with the objective of recommending a group that can best contribute to the success of the business and represent stockholder interests through the exercise of sound judgment. In determining whether to recommend a director for re-election, the Governance Committee also considers the director’s attendance at meetings and participation in and contributions to the activities of the Board and its committees. The Governance Committee may, at its discretion, choose to utilize a third party for identifying and evaluating potential director nominees. The Governance Committee will consider director candidates properly recommended by stockholders by providing notices of stockholder proposals in compliance with our Bylaws and applicable law. The Governance Committee’s process for considering such stockholder recommendations is no different than its process for screening and evaluating candidates suggested by directors, our management, or third parties.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION It is the Board’s practice to maintain a fair and straightforward non-employee director compensation program that is also designed to be competitive with director compensation programs of the Company’s peers. The Compensation Committee periodically reviews the type and form of compensation paid to our non-employee directors in consultation with independent compensation consultants the Committee engages from time to time, before recommending the amount and form of director compensation for approval by the Board. In recommending changes to the Company’s director compensation package, the Compensation Committee reviews market data provided by independent compensation consultants and considers whether any changes in director compensation are required to enable the Company to retain talented Board members, who, as members of the Board, are responsible for setting the Company’s strategic vision, overseeing its growth and development, and in aligning the Company’s mission with its stockholders’ interests. Board members who are also our employees receive no compensation for their service as Board members. Our directors who also served as executive officers, Messrs. Yi and Les, did not receive additional compensation for their services as directors for the year ended December 31, 2023.
Director Compensation Table
Director Compensation Table The compensation paid or awarded for 2023, to our directors, as of December 31, 2023, is set forth in the table below.
Director Compensation Table
| | Fees Earned or | Stock | All Other | | | | Paid in Cash | Awards | Compensation | Total | | Name | ($) | ($)(1) | ($) | ($) | | Benjamin Yi(2) | — | — | — | — | | Jason Les(3) | — | — | — | — | | Hubert Marleau(4) | 120,000 | 495,040 | — | 615,040 | | Hannah Cho(5) | 120,000 | 495,040 | — | 615,040 | | Lance D’Ambrosio(6) | 120,000 | 495,040 | — | 615,040 |
Director Compensation Table
| (1) The “Stock Awards” column reflects the aggregate grant date fair value for Stock Grants awarded during the fiscal year ended December 31, 2023, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. See Note 15 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Annual Report”) for details as to the assumptions used to determine the grant date fair value of the Stock Grants. The aggregate number of Stock Grants outstanding at fiscal year ended December 31, 2023, is 10,228,059 unvested shares, as reported in our 2023 Annual Report. |
Director Compensation Table
The aggregate number of outstanding equity awards for each of our non-employee directors as of April 29, 2024 is set forth in the table below.
Director Compensation Table
| Name | Aggregate Number of Outstanding Awards(a) | | Hubert Marleau | 24,000 | | Hannah Cho | 24,000 | | Lance D’Ambrosio | 24,000 |
Director Compensation Table
(a) Represents outstanding Stock Grants awarded to our non-employee directors on December 29, 2023.
Director Compensation Table
| (2) Mr. Yi currently serves as our Executive Chairman, making him an executive officer of the Company. He received no additional compensation for his services as a director of the Board in 2023. |
Director Compensation Table
| (3) Mr. Les currently serves as our Chief Executive Officer, making him an executive officer of the Company. He received no additional compensation for his services as a director on the Board for 2023. |
Director Compensation Table
| (4) Mr. Marleau currently serves as the Lead Independent Director on our Board and as Chair of its Governance Committee. Stock awards include 32,000 shares of RSUs granted at a fair value of $15.47 per share, as of December 29, 2023, issued under the Company’s 2019 Equity Plan pursuant to equity award agreements between Mr. Marleau and the Company as compensation for Mr. Marleau’s service as a director for the fiscal year ending December 31, 2024. Pursuant to the equity award agreements, such RSUs are eligible to vest, if at all, in four quarterly installments after the grant date, convertible into shares of our common stock, on a one-for-one basis. |
Director Compensation Table
| (5) Ms. Cho currently serves as an independent director on our Board and as Chair of its Compensation Committee. Stock awards include 32,000 RSAs granted at a fair value of $15.47 per share, as of December 29, 2023, issued under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Ms. Cho and the Company as compensation for Ms. Cho’s service as a director for the fiscal year ending December 31, 2024. Pursuant to the equity award agreement, these grants are eligible to vest in four quarterly installments convertible into shares of our common stock, on a one-for-one basis and such RSAs are eligible to vest, if at all, in four equal quarterly installments after the grant date. |
Director Compensation Table
| (6) Mr. D’Ambrosio currently serves as an independent director on our Board and as Chair of its Audit Committee. Stock awards include 32,000 RSAs granted at a fair value of $15.47 per share, as of December 29, 2023, issued under the |
Director Compensation Table
Company’s 2019 Equity Plan pursuant to an equity award agreement between Mr. D’Ambrosio and the Company as compensation for Mr. D’Ambrosio’s service as a director for the fiscal year ending December 31, 2024. Pursuant to the equity award agreement, these grants are eligible to vest in four quarterly installments convertible into shares of our common stock, on a one-for-one basis and such RSAs are eligible to vest, if at all, in four equal quarterly installments after the grant date.
2023 Company Highlights
| ● | We entered into a long-term master purchase and sales agreement to secure the long-term supply of state-of-the-art immersion miners and executed purchase orders for delivery of a total of 99,840 new miners representing, upon full deployment of these new, state-of-the-art immersion miners, an anticipated total self-mining hash rate capacity of 40.8 EH/s. |
Compensation Philosophy and Objectives
| Our Compensation Practices | | Caps on cash and equity incentive compensation for our executive officers | | Multi-year vesting schedules | | Clawback provisions on equity compensation | | Meaningful stock ownership requirements for executive officers and directors | | Use of an independent compensation consultant by the Compensation Committee | | Annual review of our compensation strategy by the Compensation Committee | | Equity compensation largely based on achievement of performance metrics | | Minimum vesting requirements applicable to all participants |
Compensation Philosophy and Objectives
| What We Don't Do | | No guaranteed salary increases for our executive officers | | No "single trigger" change in control benefits | | No option/SAR repricing without stockholder approval | | No equity compensation plan evergreen features | | No excessive exceptions to minimum vesting requirements | | No option reloading | | No payout of dividends (or dividend equivalents) on unvested equity awards | | No tax gross-up on any equity award grants |
Compensation Philosophy and Objectives
| ● | Competitive in the Market - attract and retain talented leaders through competitive pay programs; |
Compensation Philosophy and Objectives
| ● | Aligned with Stockholders - align executive officer and stockholder interests to optimize long-term stockholder value; and |
Compensation Philosophy and Objectives
| ● | Balance - pay-for-performance metrics should ensure a mix of fixed and variable, “at risk” compensation that fairly balances with our goals of attracting and retaining top talent, while motivating employees to be high-performing through an appropriate balance of short-, medium-, and long-term incentive awards and manage total compensation costs. |
Role of the Compensation Consultant
Role of the Compensation Consultant On an annual basis, the Compensation Committee directs its independent compensation consultant to review the Company’s compensation practices. The Company has engaged Compensia to be its independent compensation consultant. Compensia’s role is to benchmark and provide an assessment to the Compensation Committee so they may determine whether the overall executive compensation program is consistent with our business strategy and objectives and promotes our compensation philosophy. The Compensation Committee also takes into account the performance, experience, skills, level of responsibility and future potential of each NEO in making compensation decisions rather than adhering to a specific benchmarked percentage for any of our NEOs. Taking into consideration the independence factors in the Nasdaq Rules, the Compensation Committee has made the determination that, in its business judgment, that Compensia, the newly engaged compensation consultant, is independent and that their work did not raise any conflicts of interest.
Our Executive Compensation Program Elements for 2023
Annual Incentive Plan Compensation Each year, the Compensation Committee establishes performance targets, target bonus amounts (generally as a percentage of the applicable employee’s base salary for the year), target award opportunities and other terms and conditions of annual cash incentive for each of our NEOs and other eligible employees under our Annual Incentive Plan (the “AIP”). Generally, employees become eligible to participate in the AIP after completing 90 days of continuous employment with the Company, and eligible employees must remain employed through the date the AIP bonus is paid to receive the cash incentive bonus for that year, subject to the terms of individual employment agreements and the Company’s Change In Control Policy. See “Change In Control Policy” on page 46 of this Proxy Statement. The target amounts set by the Compensation Committee relate to quantitative performance measures, such as the number of Bitcoin the Company mines during the applicable year, and qualitative performance measures, such as the achievements of a manager’s team during the applicable year. The Compensation Committee has substantial flexibility in establishing performance objectives, thresholds, targets, and maximums each year. Following the end of each year, the Compensation Committee will determine the extent to which the performance targets were achieved and the amount of the award that is payable to the NEOs and eligible employees. 2023 Annual Incentive Plan In 2023, all NEOs participated in our AIP. The Compensation Committee, in conjunction with its independent compensation consultant, Compensia, set goal amounts structured to range from 0% to 200% of pre-established award values dependent upon Company performance in specific pre-determined financial performance measures compared to our industry specific, publicly traded peers; and NEOs performance in achieving the Company’s strategic objectives. This structure creates the potential for above-target payouts if our financial performance surpasses our target, and a risk of below-target payouts if the Company’s financial performance is below target. The primary objectives of the AIP in 2023 were to incentivize Riot’s senior management team to achieve industry-leading financial results and address investor feedback by developing a plan that is quantitative and formulaic. Award Target Values. The independent directors of our Compensation Committee set target values for Riot’s Executive Chairman, Chief Executive Officer, Chief Financial Officer, and General Counsel and Corporate Secretary, and any other members of the executive team (the “AIP Executives”). Generally, target values are set as a percentage of base salary, and are adjusted for changes in base salary throughout the year. The target values set for the AIP Executives, identified above, are 100% of the base salary and with a maximum achievement level of 200% to account for over performance of targets. For 2023, there were no changes to the target AIP percentages from the prior fiscal year.
Our Executive Compensation Program Elements for 2023
| ● | Messers. Les and Yi had target AIP percentages equal to 100% of their base salary, and 10 Bitcoin. |
Our Executive Compensation Program Elements for 2023
| ● | Messers. Yee, Jackman, and Chung had target AIP percentages equal to 100% of their base salary in their roles as EVPs. |
Our Executive Compensation Program Elements for 2023
Long-Term Equity Incentives The Compensation Committee determines equity grants for each NEO based on a number of factors such as appropriate mix of types of equity-based compensation (i.e., the percentage of total award target value allocated to each type of award), the total target value for long-term equity incentive compensation awards, and specific numbers of restricted shares to be granted, based on the percentage of total award target value allocated to each type of equity award and a valuation of our common stock as of the grant date which varies greatly. When determining our NEOs’ equity incentive awards, the Compensation Committee considers comparable equity incentive awards to executive officers in the Company’s Peer Group, the NEO’s role, individual performance, and potential future contributions to the Company. Our mix of the type of awards granted are based on an analysis of the unvested equity held by an NEO, the practices of Peer Group companies in awarding equity for similar positions (including equity mix and award values), and the pool of available shares under the 2019 Equity Plan. NEOs are generally to be award equity on an annual basis, typically after our annual general meeting of stockholders for that year. Such awards generally consist of a mix of time/service-based awards and performance based awards. For 2023, the equity awards made to our NEOs were comprised of 50% time-based RSAs or RSUs and 50% performance-based PRSAs or PSUs. Equity Incentives are intended to:
Our Executive Compensation Program Elements for 2023
| ● | Focus NEOs and other employees on achieving long-term financial, strategic and other business performance goals; |
Securities Authorized for Issuance Under Equity Compensation Plans
Securities Authorized for Issuance Under Equity Compensation Plans The 2019 Equity Plan, as amended The Company currently has one equity compensation plan, the 2019 Equity Plan, as amended. The Company currently provides stock-based compensation to employees, directors and consultants under the 2019 Equity Plan, as approved by the Company’s stockholders on October 23, 2019. The Company’s previous 2017 Stock Incentive Plan, as amended (the “2017 Plan”), was replaced by the 2019 Equity Plan. No additional grants can be made under the 2017 Plan. The Company currently has reserved 38,500,000 common shares for issuance under the 2019 Equity Plan. As of the date of this Proxy Statement, the Company has granted awards of 38,102,834 shares of restricted stock and, as discussed under the following section, of PRSAs and PSUs, under the 2019 Equity Plan which are, upon vesting and settlement by the Company, convertible into an equal number of shares of the Company’s common stock. 2023 Long-Term Incentive Program On July 13, 2023, the Compensation Committee adopted the LTIP for all eligible employees of Riot and its subsidiaries under the 2019 Equity Plan. The purpose of the LTIP is to encourage long-term employee retention through service-based and performance-based awards which are comprised of RSAs, RSUs, PRSAs, or performance-based restricted stock units (“PSUs”), as identified in each participant’s award agreement (the “LTIP Award”). The Compensation Committee, or its delegee, shall determine the size of the grants awarded to participants in the LTIP. Each LTIP Award is divided and allocated one portion (50%) to service-based awards, and the other portion (50%) to performance-based awards. For more information, please see the form of “LTIP Award Agreement” as filed with the SEC on Form 8-K on July 19, 2023. Service-based (Time-based) Awards Under the 2019 Equity Plan, the Compensation Committee authorizes and administers grants of RSAs and RSUs. RSAs and RSUs are made primarily for retention purposes and as a recruitment mechanism. They are granted to all executive officers, including the NEOs. RSAs and RSUs represent the right to receive one unrestricted share of Riot’s common stock upon vesting, subject to a continued service requirement. Service-based awards are granted as RSAs or RSUs which are eligible to vest, if at all, in three (3) approximately equal tranches, annually, over three (3) years (the “Award Term”). Each service-based award under the LTIP is granted, subject to and contingent upon, the participant’s (as defined in the LTIP Award agreement) continued service with the Company through the applicable annual vesting dates, as specified in the applicable LITP Award agreement. Any unvested LTIP Awards will be automatically forfeited and returned to the Company, without consideration, upon the end of the Award Term or the earlier termination of the Participant’s service with the Company, except as otherwise agreed by the Company. No proportionate vesting or credit shall be given for partial service prior to the applicable vesting date. Because RSAs and RSUs vest depending on the award recipient’s continuous service with the Company through the vesting date, we believe RSAs and RSUs provide a strong incentive to award recipients to remain with the Company for the long term, helping the Company retain the top talent needed to continue advancing on the Company’s strategic objectives. Further, because the value of RSAs and RSUs depends on the market price of the Company’s common stock at the time vested RSAs and RSUs are settled in shares of common stock, we believe RSAs and RSUs help to better align the interests of our employees, NEOs, directors, and service providers with those of our stockholders. Performance-based Awards Performance-based awards under the LTIP are granted as PRSAs or PSUs which are eligible to vest, if at all, after the end of a three-year performance period, subject to continued employment and based on shareholder return on investment (“Total Shareholder Return” or “TSR”) during the Award Term. TSR was chosen as the key metric because of its place as a critical element of governance and compensation due to its perception as a neutral, market-based measure of value created by a company. The Compensation Committee determines the number of PRSAs or PSUs that will vest at the end of the three-year performance period according to the pre-established vesting matrix of LTIP tiers that are based on title and position within the Company. Under the LTIP, TSR is calculated based on the percentage change in market price across the LTIP performance period, and the difference between the percentage change of a share of the Company’s common stock (the “Company TSR”) and the percentage change of the market price of an interest in the Russell 3000 Index (INDEXRUSSELL: RUA) (the “Index TSR”), is the “Relative TSR”. The Committee selected the Russell 3000 Index as the comparative measure for TSR under the LTIP based on advice from our independent compensation advisors, Compensia, and because the Compensation Committee believes the Russell 3000 Index, which includes the Company’s common stock, provides a fair competitive benchmark for the Company’s share price performance. The Compensation Committee has reserved the right to substitute the index chosen as the comparative measure to determine Relative TSR for future LTIP Awards, if the Russell 3000 Index is no longer available or if another index is determined, by the Committee, in its sole discretion, to be a superior comparative measure. Under the LTIP, performance-based awards are meant to reward program participants for positive Relative TSR (i.e., Company TSR overperformance against the identified index TSR), and to discourage negative Relative TSR (i.e., Company TSR underperformance against the identified index TSR). Accordingly, Relative TSR determines the percentage of the LTIP Award that becomes eligible to vest. A higher Relative TSR results in more shares of common stock vesting under the LTIP Award. The Compensation Committee has adopted the vesting percentages corresponding to each tiered change in Relative TSR. As shown below, there is no minimum corresponding vesting percentage of the award, and a cap of up to a maximum of 200% corresponding vesting percentage of the award. Payout of 100% of the targeted number of PRSAs or PSUs will occur if a Relative TSR hurdle of 0% was met as of the end of the performance period. Each Relative TSR Hurdle represents a limit, and no proportionate vesting will apply between each Relative TSR Hurdle. Vesting of any such performance-based award will occur as of the end of the Award Term, subject to the Compensation Committee’s certification, and contingent upon the participant’s continuous service with the Company through the end of the Award Term. Except as otherwise agreed by the Company, unvested LTIP Awards as of (i) the end of the Award Term (based on the Relative TSR as of the end of the Award Term certified by the Compensation Committee), or (ii) the earlier termination of the Participant’s service with the Company, will be automatically forfeited and returned to the Company without consideration.
Securities Authorized for Issuance Under Equity Compensation Plans
| Relative TSR Hurdle | Vesting Percentage (of the Target Award) | | | (50%) to < (40%) | 0% | | | (40%) to < (30%) | 20% | | | (30%) to < (20%) | 40% | | | (20%) to < (10%) | 60% | | | (10%) to < 0% | 80% | | | 0% to < 10% | 100% | (Target Award) | | 10% to < 20% | 140% | | | 20% to < 25% | 180% | | | 25% and above | 200% | (Maximum Award) |
Securities Authorized for Issuance Under Equity Compensation Plans
2022 Conversion of all Then Outstanding RSUs and PSUs into RSAs and PRSAs On September 27, 2022, we converted on a one-for-one basis all then outstanding RSU and PSU awards previously granted under the 2019 Equity Plan into equal awards of RSAs and PRSAs, respectively, pursuant to each person’s RSA award agreement. This change did not alter the underlying value of shares awarded. 2021 Performance-Based Shares (Historic) In August 2021, the Compensation Committee and the Board adopted the now terminated performance plan under the 2019 Equity Plan (the “2021 Performance Plan”), under which specific financial performance measures and their relative weighting and associated targets and thresholds were established. The performance targets under the 2021 Performance Plan served as the basis for measuring how we performed and for determining the grant of performance-based awards to eligible employees. The goal of the 2021 Performance Plan was to align the interests of Riot’s employees, including its NEOs, with the long-term operational objectives of the Company. Each eligible employee was granted a target award of unvested PRSAs when she or he was added to the 2021 Performance Plan. Such shares which were eligible to vest upon the Company’s achievement of specified performance objectives, as further identified below, quarterly, throughout the two-year performance period ended December 31, 2023 (the “Performance Period”), subject to the recipient’s continued service with the Company through each vesting date. Targets awards were set at levels we believe required significant effort on the part of the executive team and represented a high level of execution and growth based on prior-year performance results, existing business conditions, the markets in which we participate and our outlook. Upon the expiration of the Performance Period, all unearned and unvested shares remaining under the 2021 Performance Plan were forfeited, upon certification by the Compensation Committee, back to the Company as of February 26, 2024. Individuals became eligible to participate in the 2021 Performance Plan after completing 90 days of continuous employment with the Company. Upon confirmation by the Compensation Committee, eligible employees were added to the 2021 Performance Plan and granted a target award of unvested PRSAs as of the first trading day of the first fiscal quarter following the date they became eligible to participate in the 2021 Performance Plan. Each eligible employee’s target award was eligible to vest during the Performance Period upon the Company’s achievement of performance objectives, as explained below. Vesting of Target Awards Under the Performance Plan, each Target Award was divided into two Performance Objectives: (i) the Infrastructure Development Target (as described below); and (ii) the Adjusted EBITDA Target (as described below). Infrastructure Development Target The “Infrastructure Development Target” was related to the Company’s successful development and monetization of up to 1,500 MW of Bitcoin mining and hosting infrastructure. The Infrastructure Development Target was further divided into fifteen 100 MW project units generally corresponding to one 100 MW Bitcoin mining structure owned and operated by the Company (each, a “Project Unit”). A Project Unit was only eligible to be achieved once, and only those Project Units which were not achieved as of the date the employee were added to the Performance Plan. Each Project Unit consisted of the following three milestone goals:
Securities Authorized for Issuance Under Equity Compensation Plans
| 1. | Installation of High-Voltage Energy Infrastructure. One-third (1/3) of the Project Unit to vest upon the successful installation of the electricity transmission infrastructure interconnected to the grid and capable of delivering usable power to the Bitcoin mining structure. |
Securities Authorized for Issuance Under Equity Compensation Plans
| 2. | Development of Miner-Ready Infrastructure. One-third (1/3) of the Project Unit to vest upon the successful development of a miner-ready building, which was deemed to occur when a Bitcoin mining structure had: (i) sufficient racking installed to house miners capable of utilizing the full usable electrical capacity of the building; (ii) highspeed Internet and electrical power (including all of the medium and low voltage equipment necessary to deliver power to operating miners) connected to the racks; and (iii) the cooling system (air or immersion) installed and ready for operation. |
Securities Authorized for Issuance Under Equity Compensation Plans
| 3. | Monetization of Capacity. One-third (1/3) of the Project Unit to vest upon the installation and operation of miners (whether the Company’s miners deployed in a self-mining capacity, or third-party miners installed in a hosted capacity) utilizing the full usable power capacity of the miner-ready infrastructure installed at the Bitcoin mining structure. |
Securities Authorized for Issuance Under Equity Compensation Plans
The Compensation Committee assessed the Company’s achievement of the Infrastructure Development Target (and thus, the vesting of PRSAs allocated to the Project Units under the Infrastructure Development Target) on a quarterly basis, once results for the preceding fiscal quarter are available for the Compensation Committee’s review. Accordingly, the PRSAs allocated to the portions of the Project Unit(s) achieved during the preceding fiscal quarter would vest upon on the Compensation Committee’s certification that such portions of the Project Unit(s) had been achieved, provided the award recipient remained employed by the Company through the date the Compensation Committee certified such achievement. Adjusted EBITDA Target The “Adjusted EBITDA Target” related to the Company’s achievement of financial performance objectives established by the Board based on increases in the Company’s annual Adjusted EBITDA. “EBITDA” refers to earnings before interest, taxes, depreciation and amortization, and Adjusted EBITDA is a non-GAAP financial measure used by the Board to assess performance. The Adjusted EBITDA Target was divided into ten $50 million Adjusted EBITDA milestones (i.e., up to $500 million in total added Adjusted EBITDA), each of which could only be achieved once during the Performance Period. The Compensation Committee assessed the Company’s achievement of Adjusted EBITDA milestones annually, and PRSAs relating to the Adjusted EBITDA Target vested upon the Compensation Committee’s certification that an Adjusted EBITDA milestone has been achieved. Any unvested PRSAs allocated to the Adjusted EBIDTA Target that were unvested as of the end of the Performance Period or the earlier end of the employee’s service with the Company will be forfeited. For more explanation of the Company’s use of Adjusted EBITDA, see the discussion under the heading “Non-GAAP Measures” in the MD&A under Part II, Item 7 our Annual Report. The foregoing description is subject to, and qualified in its entirety by, the information contained in the Form 8-K, filed August 16, 2021. Forfeiture of Unvested Performance Shares As of December 31, 2023, there remained 2,248,035 Infrastructure Development target PRSAs and 757,140 Adjusted EBITDA target PRSAs that were not met. Through the life of the 2021 Performance Plan, and upon its final certification on February 22, 2024, the Compensation Committee determined that the performance objectives for a total of 1,923,444 PRSAs granted to our officers and employees were achieved; and, therefore, became vested and were eligible to be settled by the Company under the 2019 Equity Plan. All such remaining PRSAs were forfeited as of February 22, 2024.
Equity Compensation Plan Information
Equity Compensation Plan Information The following table provides information as of December 31, 2023, about the shares of common stock that may be issued upon the vesting of performance and non-performance based restricted common stock under the 2019 Equity Plan:
Equity Compensation Plan Information
| | Number of securities | | | | | to be issued | | | | | upon exercise of | | Number of securities | | | outstanding | Weighted average | remaining | | | options and restricted | exercise price of | available for | | Plan Category | common stock | outstanding options | future issuance | | Equity compensation plans approved by security holders | 401,369 | $— | 18,517,831 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 401,369 | $— | 18,517,831 |
Benefits and Perquisites
Benefits and Perquisites Our NEOs are eligible to participate in a broad range of benefits in the same manner as non-executive employees. Riot does not offer separate benefits for executive officers, other than severance benefits (see “Severance and Change in Control Benefits” below) and the executive wellness program. We generally do not provide perquisites to our NEOs other than, upon the determination of our Chief Executive Officer, business use of our leased corporate aircraft. If an NEO’s travel on our leased corporate aircraft includes a personal element, the NEO is required to fully reimburse us for the aggregate incremental cost of any such usage. We do consider the value of perquisites, to the extent provided at Peer Group companies, in assessing the competitiveness of our total compensation package for our NEOs.
Change In Control Policy
Change In Control Policy We believe that to properly motivate and incentivize our executive team in the event of a change in control and to the possibility of a termination without “cause” or a termination with “good reason,” a standardized “double trigger” change in control and severance policy is critical. We have agreed to provide payments and benefits to our NEOs and certain other executive officers in the event of a termination without “cause” or by the officer for “good reason” following a change in control transaction. Our Compensation Committee approves all change in control compensation and periodically evaluates the appropriateness of such compensation in light of advice from the Board’s new compensation advisor, Compensia, as well as the directors’ evaluation of the Company, its Peer Group, as identified in this Proxy Statement, and the Bitcoin mining industry generally. We believe that these change in control benefits assist to maximize stockholder value and maintain our NEOs’ focus in the period prior to, during and after the change in control event. Our NEO’s change in control benefit terms include the following features:
Change In Control Policy
| ● | no post-termination healthcare benefit subsidy; |
Change In Control Policy
| ● | enhanced severance benefits in connection with a change in control require a “double trigger” (which is defined as a qualifying termination during a “change in control period”) before an NEO becomes entitled to receive such benefits; and |
Change In Control Policy
| ● | no severance benefits for a termination for cause, or without good reason. |
Change In Control Policy
The severance provisions are included in such NEOs Executive Employment Agreement. With the exception of Mr. Yee, all other NEOs are eligible to receive a level of severance benefits as further identified below. Consistent with our compensation strategy, any such severance is provided for only in the event of a qualifying termination (i.e. a termination by us without “cause” or by the NEO for “good reason”.
Change In Control Policy
| Qualifying Termination | Chief Executive Officer & Executive Chairman - Months of Base Salary | EVPs - Months of Base Salary | | Termination Without Cause or Resign for Good Reason | 12 months | 12 months | | Death or Disability | 3 months | 3 months | | Change in Control "Double Trigger" | 12 months + salary through end of term of such Executive Employment Agreement | 12 months + salary through end of term of such Executive Employment Agreement |
Change In Control Policy
Additionally, such NEOs are eligible for accelerated vesting of all then outstanding service-based and performance-based awards upon a qualifying termination. For further details on severance payments, see the section below titled "Potential Post Employment Benefits”.
Fiscal Year 2023 Stockholder Advisory Vote Results and Stockholder Engagement
| What We Heard | How We Responded | | Investors said they would like to see additional transparency around equity grants. | We have incorporated an increased level of detail in this Proxy Statement to provide additional information about the variety of our equity awards granted to executives to increase transparency. For further information about our equity plans please see “Securities Authorized for Issuance Under Equity Compensation Plans” on page 42 of this Proxy Statement. | | Investors said they would appreciate some additional disclosure around our annual incentive program. | We have enhanced our disclosure of our annual incentive plan, please see “Annual Incentive Plan” on page 39 of this Proxy Statement. | | Investors said they had concerns about the quantum of our CEO’s awards. | We agreed to provide additional rationale and transparency into the Compensation Committee’s decision-making process when granting awards to the CEO. |
Fiscal Year 2023 Stockholder Advisory Vote Results and Stockholder Engagement
Consistent with our commitment to continue to engage with our top institutional investors, in 2024, we again reached out to our top 15 institutional investors representing 27.0% of shares outstanding. To date, two (2) stockholders representing nearly 15% of shares outstanding have accepted our request for engagement. Further, we have continued to provide enhanced disclosures on our equity compensation practices. This includes details on our new 2023 Long-Term Incentive program, of which at minimum 50% is subject to Relative TSR goals. This program was developed, in part, in response to the feedback we received and is appropriate for a company of our size and stage of growth. We intend to continue engaging with our stockholders and reviewing our compensation and governance practices in the future. The Board would like to reaffirm its belief in the appropriateness, effectiveness and market competitiveness of the Company’s executive compensation programs, including continued emphasis on programs that reward our executive officers for generating sustainable profitability and delivering long-term value for our stockholders. The Board and the Compensation Committee will continue to consider the results of the Company’s annual stockholder advisory votes when making future compensation decisions for our executive officers, including the NEOs.
Executive Employment Agreements
Executive Employment Agreements The Company has entered into employment agreements with, and provides post-employment benefits to, its NEOs as follows:
Benjamin Yi, Executive Chairman
Benjamin Yi, Executive Chairman On May 24, 2021, we entered into an executive employment agreement with Mr. Yi, pursuant to which he has agreed to serve as our Executive Chairman for a three-year term, which renews for successive one-year terms after the expiration of the initial term. Effective July 1, 2023, Mr. Yi’s compensation for his services as our Executive Chairman, increased from $550,000 to $600,000 as annual base salary, paid in in cash, and 10.0 Bitcoin, and is eligible to receive additional incentive bonuses under the AIP. The Company pays the cash aspect of Mr. Yi’s base salary in accordance with its regular compensation practices, and the Bitcoin aspect of his base salary is paid out on a quarterly basis as of the end of each fiscal quarter completed during his employment term. As additional compensation for his services as our Executive Chairman, Mr. Yi is eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Yi may receive as compensation for his services as our Executive Chairman will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Executive Chairman. During the fiscal year ended December 31, 2020, Mr. Yi served as an independent director on our Board and was not an officer or employee of the Company. As an independent director prior to becoming Executive Chairman, Mr. Yi received equity awards of 227,642 RSUs under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vested in regular quarterly intervals and were settled in accordance with the Company’s regular compensation procedures. Mr. Yi receives no additional compensation for his services as a member of our Board.
Jason Les, Chief Executive Officer
Jason Les, Chief Executive Officer On February 8, 2021, we entered into an executive employment agreement with Mr. Les, pursuant to which he has agreed to serve as our Chief Executive Officer (principal executive officer) for a five-year term, which renews for successive one-year terms after the expiration of the initial term. Effective July 1, 2023, Mr. Les’s compensation for his services as our Chief Executive Officer, increased from $550,000 to $600,000 as annual base salary, paid in in cash, and 10.0 Bitcoin, and is eligible to receive additional incentive bonuses under the AIP. The Company pays the cash aspect of Mr. Les’ base salary in accordance with its regular compensation practices, and the Bitcoin aspect of his base salary is paid out on a quarterly basis as of the end of each fiscal quarter completed throughout his employment term. As additional compensation for his services as our Chief Executive Officer, Mr. Les is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Les may receive as compensation for his services as our Chief Executive Officer will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Chief Executive Officer. During the fiscal year ended December 31, 2020, Mr. Les served as an independent director on our Board and was not an officer or employee of the Company. As an independent director prior to his appointment as our Chief Executive Officer and Executive Director, Mr. Les received equity awards of 288,617 RSUs under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vest in intervals and are eligible to be settled in accordance with the Company’s regular compensation procedures. Mr. Les receives no additional compensation for his services as a member of our Board.
William Jackman, EVP, General Counsel and Corporate Secretary
William Jackman, EVP, General Counsel and Corporate Secretary Effective July 5, 2021, we entered into an executive employment agreement with Mr. Jackman, pursuant to which he has agreed to serve as our EVP, General Counsel and Corporate Secretary for a three-year term, which renews for successive one-year terms after the expiration of the initial term. Effective July 1, 2023, Mr. Jackman’s compensation for his services as our EVP, General Counsel and Corporate Secretary, increased from $450,000 to $500,000 as annual base salary, paid in cash, and is eligible to receive additional incentive bonuses under the AIP, which will be paid in accordance with the Company’s regular compensation practices. As additional compensation for his services as our EVP, General Counsel and Corporate Secretary, Mr. Jackman is also eligible to receive equity awards, including incentive compensation awards, under our 2019 Equity Plan, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards.
Jason Chung, EVP and Head of Corporate Development & Strategy
Jason Chung, EVP and Head of Corporate Development & Strategy Effective May 31, 2022, we entered into an employment agreement with Mr. Chung pursuant to which he originally agreed to serve as our Head of Corporate Development for a two-year term, which renewed upon mutual agreement. On July 24, 2023 we entered into an executive employment agreement with Mr. Chung pursuant to which he agreed to serve as our EVP, Head of Corporate Development and Strategy through May 31, 2024, which automatically renews for one year terms upon each one-year anniversary thereafter. As our EVP, Head of Corporate Development and Strategy, Mr. Chung receives an annual base salary of $450,000 and is eligible to receive additional incentive bonuses under the AIP, which will be paid in accordance with the Company’s regular compensation practices. As additional compensation for his services as our EVP, Head of Corporate Development and Strategy, Mr. Chung is also eligible to receive equity awards, including incentive compensation awards, under our 2019 Equity Plan, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards.
Executive Compensation Comparison Peer Group
Executive Compensation Comparison Peer Group The Compensation Committee reviews NEO roles and responsibilities and establishes ranges for each incentive element of executive compensation after reviewing similar information for a defined group of companies (“Peer Group”). Our Peer Group is used to assess the competitiveness of our NEOs compensation. In establishing this Peer Group we sought to include companies that compete with us for executive talent and are similar to us in industry, business model, revenue and/or market capitalization. Our Compensation Committee periodically reviews the composition of this Peer Group and makes changes it determines are appropriate based on changes to our businesses or to the attributes of companies in the group or the availability of their compensation data. Our independent compensation consultant, Compensia, our Chief Executive Officer and members of management routinely provide input to our Compensation Committee regarding changes to the attributes of peer companies. The Compensation Committee considers the pay practices and relative performance of our Peer Group companies in determining target incentive compensation for our executive officers. The target amounts and compensation mix vary for each executive officer and are dependent upon various factors, none of which is specifically weighted, including the importance of the position to our organization, overall retention value, internal pay equity, and projected future value of the total compensation package. As part of our periodic review cycle, the Compensation Committee reviewed the composition of this Peer Group and determined that no changes were to be made to the selection criteria for 2024. The Peer Group for 2024 includes the following companies:
Executive Compensation Comparison Peer Group
| A10 Networks, Inc. | Couchbase, Inc. | Hut 8 Mining, Corp. | Rapid7, Inc. | TeraWulf, Inc. | | Applied Digital Corporation | Cyxtera Technologies, Inc. | Marathon Digital Holdings, Inc. | Repay Holdings Corporation | | | Bitfarms Ltd. | Fastly, Inc. | Marqeta, Inc. | Squarespace, Inc. | | | Cipher Mining Inc. | Greenidge Generation Holdings Inc. | MicroStrategy Incorporated | Stronghold Digital Mining, Inc. | | | CleanSpark, Inc. | HIVE Blockchain Technologies Ltd. | New Relic, Inc. | Sumo Logic, Inc. | |
Summary Compensation Table
Summary Compensation Table The compensation we paid to our NEOs for 2023, 2022 and 2021 is summarized in the table below:
Summary Compensation Table
| | | | | | Non-Equity | | | | | | | | Stock | Incentive Plan | All Other | | | Name and Principal Position | Year | Salary | Bonus | Awards (1) | Compensation (2) | Compensation | Total | | | | ($) | ($) | ($) | ($) | ($) | ($) | | Jason M. Les | 2023 | 963,807(3) | — | 10,991,245 | 1,496,478(4) | 39,060(5) | 13,490,590 | | Chief Executive Officer | 2022 | 679,757(6) | — | 20,297,175 | 511,225(6) | 12,111(6) | 21,500,269 | | (Principal Executive Officer) | 2021 | 631,887(7) | — | 20,155,500 | 1,085,963(7) | 3,518(7) | 21,876,868 | | Benjamin Yi | 2023 | 986,087(8) | — | 10,991,245 | 1,496,478(9) | 28,539(10) | 13,502,349 | | Executive Chairman | 2022 | 679,757(11) | — | 20,297,175 | 512,764(11) | 8,853(11) | 21,498,551 | | | 2021 | 484,857(12) | — | 20,123,600 | 732,153(12) | 5,331(12) | 21,345,941 | | Colin Yee(13) | 2023 | 400,000 | — | 7,327,477 | 600,000 | 7,475(14) | 8,334,952 | | EVP, Chief Financial Officer | 2022 | 228,910 | — | 3,310,534 | 200,933 | — | 3,740,377 | | (Principal Financial Officer) | 2021 | — | — | — | — | — | — | | William Jackman | 2023 | 483,710 | — | 7,327,477 | 675,000 | 30,000(15) | 8,516,187 | | EVP, General Counsel | 2022 | 358,833 | — | 5,074,294 | 315,333 | — | 5,748,460 | | | 2021 | 147,885 | — | 12,822,179 | 230,155 | — | 13,200,218 | | Jason Chung(13) | 2023 | 375,000 | — | 7,327,477 | 562,500 | 15,582(16) | 8,280,559 | | EVP, Head of Corporate Development & Strategy | 2022 | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — |
Summary Compensation Table
| (1) Amounts reflect the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718 (ASC 718), excluding the effect of estimated forfeitures, of the RSA, RSUs, PRSAs, and PSUs granted to the NEOs, based on the closing price per share of our common stock as of the grant date, as reported on the Nasdaq Capital Market. The FASB ASC Topic 718 grant date fair value of one RSA or RSU, in the applicable fiscal year, is the closing price of one share of our stock on the date of grant. The value for the PRSAs or PSUs, which are subject to performance conditions, is based on the probable outcome of completion of all performance conditions on the grant date of the 2021 Performance Plan or the LTIP. PRSA and PSU fair value for the 2023 LTIP awards was determined based on a third-party, multifactor Monte Carlo valuation model in accordance with FASB ASC Topic 718 assuming maximum payout under the LTIP. These amounts do not necessarily correspond to the actual value that may be recognized by the NEO, which depends, among other things, on the vesting of the applicable RSAs, RSUs, PRSAs, or PSUs, and the closing price per share of our common stock as of settlement of the vested award. See Note 15, Note 17 and Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, 2022 and 2021, respectively, for details as to the assumptions used to determine the grant date fair value of the RSAs, RSUs, PRSAs and PSUs. |
Summary Compensation Table
| (2) The Compensation Committee initially adopted the AIP in 2021 which awards non-equity incentive compensation to NEOs and other eligible employees based on achievement of designated, and rigorous Company and individual performance targets during the applicable year. AIP performance targets are established annually as a percentage of the NEO’s base salary and are awarded based on the NEO’s achievement of the performance targets established during the applicable year. |
Summary Compensation Table
| (3) Reflects the following amounts paid to Mr. Les as salary compensation for services in 2023 of $623,473 in cash, 10.0 Bitcoin compensation, and 0.88 Bitcoin paid time off payout compensation, with an aggregate fair value of $340,334 (measured as of the quarterly Bitcoin payment date). |
Summary Compensation Table
| (4) The 2023 AIP non-equity compensation for Mr. Les includes $862,500 in cash and 15.0 Bitcoin, with an aggregate fair value of $633,978, measured as of December 31, 2023. |
Summary Compensation Table
| (5) Reflects the amounts paid on behalf of Mr. Les in 2023 for medical insurance coverage of $15,555, Executive Wellness Program of $8,625, Life Insurance of $600, Disability Insurance of $1,080, and 401(k) match of $13,200. |
Summary Compensation Table
| (6) Reflects the following amounts paid to Mr. Les as compensation for services in 2022: of $420,833 in cash and 10.0 Bitcoin, with an aggregate fair value of $258,924 (measured as of the quarterly Bitcoin payment date). The 2022 AIP non-equity compensation for Mr. Les includes $370,333 in cash and 8.80 Bitcoin, with an aggregate fair value of $140,892, measured as of December 31, 2022. Reflects the amounts paid on behalf of Mr. Les in 2022 for medical insurance coverage of $6,611 and 401(k) match of $5,500. |
Summary Compensation Table
| (7) Reflects the following amounts paid to Mr. Les as compensation for services in 2021: (a) $215,538 in cash and 8.958 Bitcoin, with an aggregate fair value of $403,492 (measured as of the quarterly Bitcoin payment date), representing his 2021 base salary as Riot’s CEO of $240,000 cash, plus 10.0 Bitcoin, prorated based on his February 8, 2021 employment start date; and (b) $12,857 in cash fees paid to him as compensation for his service as an independent director on the Board for the period prior to February 8, 2021. The 2021 AIP non-equity compensation for Mr. Les includes $366,415 in cash and 15.2673 Bitcoin, with an aggregate fair value of $719,548, measured as of December 31, 2021. The amounts paid on behalf of Mr. Les in 2021 for medical insurance coverage after his appointment as Riot’s CEO on February 8, 2021, total $3,518 in 2021. |
Summary Compensation Table
| (8) Reflects the following amounts paid to Mr. Yi as salary compensation for services in 2023 of $638,462 in cash, 10.0 Bitcoin compensation, and 1.15 Bitcoin paid time off payout, with an aggregate fair value of $347,625 (measured as of the quarterly Bitcoin payment date). |
Summary Compensation Table
| (9) The 2023 AIP non-equity compensation for Mr. Yi includes $862,500 in cash and 15.0 Bitcoin, with an aggregate fair value of $633,978, measured as of December 31, 2023. |
Summary Compensation Table
| (10) Reflects the amounts paid on behalf of Mr. Yi in 2023 for medical insurance coverage of $8,853, and Executive Wellness Program of $19,686. |
Summary Compensation Table
| (11) Reflects the following amounts paid to Mr. Yi as compensation for services in 2022: of $420,833 in cash and 10.0 Bitcoin, with an aggregate fair value of $258,924 (measured as of the quarterly Bitcoin payment date). The 2022 AIP non-equity compensation for Mr. Yi includes $370,333 in cash and 8.80 Bitcoin, with an aggregate fair value of $142,431, measured as of December 31, 2022. Reflects the amounts paid on behalf of Mr. Yi in 2022 for medical insurance coverage of $8,853. |
Summary Compensation Table
| (12) The following reflect amounts paid to Mr. Yi as compensation for his services in 2021: (a) $144,516 in cash and 6.048 Bitcoin, with an aggregate fair value of $275,664 (measured as of the quarterly Bitcoin payment date), representing his 2021 base salary as Riot’s Executive Chairman of $240,000 cash, plus 10.0 Bitcoin, prorated based on his May 24, 2021 employment start date; and (b) $64,668 in cash fees paid to him as compensation for his service as an independent director on the Board for 2021, prior to his appointment as Executive Chairman on May 24, 2021. The 2021 AIP non-equity compensation for Mr. Yi includes $247,036 in cash and 10.293 Bitcoin, with an aggregate fair value of $485,117, measured as of December 31, 2021. The amounts paid on behalf of Mr. Yi in 2021 for medical insurance coverage after his appointment as Riot’s Executive Chairman on May 24, 2021, total $5,331. |
Summary Compensation Table
| (13) Mr. Yee was not an NEO in fiscal year 2021; and Mr. Chung was not an NEO in fiscal years 2021 or 2022. |
Summary Compensation Table
| (14) Reflects the amounts paid on behalf of Mr. Yee in 2023 for the Executive Wellness Program of $7,475. |
Summary Compensation Table
| (15) Reflects the amounts paid on behalf of Mr. Jackman in 2023 for medical insurance coverage of $30,000. |
Summary Compensation Table
| (16) Reflects the amounts paid on behalf of Mr. Chung in 2023 for the Executive Wellness Program of $15,582. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
Grants of Plan-Based Awards Table for Fiscal Year 2023 The following table presents, for each of our NEOs for the year ended December 31, 2023, information concerning each grant of a plan-based equity award made during the year ended December 31, 2023. This information supplements the information about these awards set forth in the foregoing Summary Compensation Table.
Grants of Plan-Based Awards Table for Fiscal Year 2023
| | | | Estimated | | | | | | | | | Possible | | | | | | | | | Payouts | | | | | | | | | Under | | | All other | | | | | | Non- | | | Stock | Grant | | | | | Equity | Estimated Future | | Awards: | Date Fair | | | | | Incentive | Payouts Under | | Number of | Value of | | | | | Plan | Equity Incentive | | Shares of | Stock and | | | | | Awards(1) | Plan Awards(2) | | Stock or | Option | | | | Type of | Target | Target | Maximum | Units | Awards(3) | | Name | Grant Date | Award | ($) | ($) | ($) | (#) | (#) | | Jason Les | March 17, 2023 | AIP | 997,652(4) | — | — | — | — | | Chief Executive Officer | July 13, 2023 | RSA | — | — | — | 184,820 | 3,749,998 | | (Principal Executive Officer) | July 13, 2023 | PRSA | — | 184,820 | 369,640 | | 7,241,248 | | Benjamin Yi | January 26, 2023 | AIP | 997,652(5) | — | — | — | — | | Executive Chairman | July 13, 2023 | RSA | — | — | — | 184,820 | 3,749,998 | | | July 13, 2023 | PRSA | | 184,820 | 369,640 | — | 7,241,248 | | Colin Yee | March 17, 2023 | AIP | 400,000 | — | | | | | EVP, Chief Financial Officer | July 13, 2023 | RSU | — | — | — | 123,213 | 2,499,992 | | (Principal Financial Officer) | July 13, 2022 | PSU | — | 123,213 | 246,426 | — | 4,827,485 | | William Jackman | March 17, 2023 | AIP | 450,000 | — | — | — | — | | EVP, General Counsel | July 13, 2023 | RSA | — | — | — | 123,213 | 2,499,992 | | | July 13, 2023 | PRSA | | 123,213 | 246,426 | | 4,827,485 | | Jason Chung | March 17, 2023 | AIP | 375,000 | — | — | — | — | | | July 13, 2023 | RSA | — | — | — | 123,213 | 2,499,992 | | EVP, Head of Corporate Development & Strategy | July 13, 2022 | PRSA | | 123,213 | 246,426 | | 4,827,485 |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| (1) The Compensation Committee grants non-equity incentive plan awards to each of our NEOs under the AIP on an annual basis pursuant to an employment agreement between the Company and such NEO. The target amount for each NEO’s AIP award for the year ended December 31, 2023, was set at 100% of such NEO’s base salary, and payout is determined by the Compensation Committee in its evaluation of such NEO’s individual performance during the year. There are no minimum award thresholds and the maximum award amounts established under the AIP, and for 2023 a participant in the AIP may receive up to 200%. Individual NEOs’ AIP bonuses are determined based on the Compensation Committee’s assessment of their achievement of individual performance objectives during the year. See the discussion of the AIP in the Compensation Discussion and Analysis beginning on page 34 of this Proxy Statement. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| (2) Compensation levels and target amounts are determined and recommended by the Compensation Committee as further discussed in the Compensation Discussion & Analysis section of this Proxy Statement. The vesting schedule for each RSA or RSU awarded under the LTIP is set forth in the “Outstanding Equity Awards at Fiscal Year-End” table below, and the vesting conditions applicable to PRSA awards are discussed further in the Compensation Discussion and Analysis, see “Securities Authorized for Issuance Under Equity Compensation Plans” on page 42 of this Proxy Statement. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| (3) In accordance with SEC requirements, these amounts reflect the aggregate grant date fair value based upon probable (at target) achievement of the performance goal, excluding the effect of estimated forfeitures. The amounts reported do not reflect compensation actually received by the NEOs. Any and all unearned PRSAs that have not been achieved as of December 31, 2023 will be forfeited by the NEO. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| (4) Mr. Les’ base salary for 2023 was increased in July 2023 from $550,000 cash and 10.0 Bitcoin to $600,000 and 10.0 Bitcoin, and the 2023 AIP target amount for Mr. Les was $575,000 cash and 10.0 Bitcoin (or $422,652, based on the average price of one Bitcoin on December 31, 2023). As disclosed, overperformance under the AIP may result in a payout over 100% (up to a maximum of 200%), as determined by the Compensation Committee. The actual U.S. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| Dollar amount of the Bitcoin ultimately awarded to Mr. Les under the AIP for 2023 is disclosed in the “Non-Equity Incentive Plan Compensation” column of the foregoing Summary Compensation Table. |
Grants of Plan-Based Awards Table for Fiscal Year 2023
| (5) Mr. Yi’s base salary for 2023 was increased in July 2023 from $550,000 cash and 10 Bitcoin to $600,000 and 10.0 Bitcoin, the 2023 AIP target amount for Mr. Yi was $575,000 cash and 10.0 Bitcoin (or $422,652, based on the average price of one Bitcoin on December 31, 2023). As disclosed, overperformance under the AIP may result in a payout over 100% (up to a maximum of 200%), as determined by the Compensation Committee. The actual U.S. Dollar amount of the Bitcoin ultimately awarded to Mr. Yi under the AIP for 2023 is disclosed in the “Non-Equity Incentive Plan Compensation” column of the foregoing Summary Compensation Table. |
Outstanding Equity Awards at Fiscal Year End Table
Outstanding Equity Awards at Fiscal Year End Table The Company does not grant equity awards outside of its 2019 Equity Plan. The following table provides information regarding the outstanding equity awards granted under its 2019 Equity Plan to our NEOs as of December 31, 2023:
Outstanding Equity Awards at Fiscal Year End Table
| | | | Equity Incentive Plan | | | | | | | | Awards | | | | | | | | | | | Market | | | | | | Market | Number of | Value of | | | | | Number of | Value of | Unearned | Unearned | | | | | Shares or | Shares or | Shares or | Shares or | | | | | Units of | Units of | Units of | Units of | | | | | Stock That | Stock That | Stock That | Stock That | | | | | Have Not | Have Not | Have Not | Have Not | | | | Type of | Vested | Vested(2) | Vested | Vested(2) | | Name | Grant Date | Award(1) | # | ($) | # | ($) | | Jason Les(3) | August 12, 2021 | PRSA | — | — | 328,334 | 5,079,327 | | Chief Executive Officer (Principal Executive Officer) | September 27, 2022 | RSA | 1,485,884 | 22,986,625 | — | — | | | July 13, 2023 | RSA | 184,820 | 2,859,165 | — | — | | | July 13, 2023 | PRSA | — | — | 369,640 | 5,718,331 | | Benjamin Yi(4) | August 12, 2021 | PRSA | — | — | 328,334 | 5,079,327 | | Executive Chairman | September 27, 2022 | RSA | 1,485,884 | 22,986,625 | — | — | | | July 13, 2023 | RSA | 184,820 | 2,859,165 | — | — | | | July 13, 2023 | PRSA | | | 369,640 | 5,718,331 | | Colin Yee(5) | April 12, 2022 | RSA | 25,140 | 388,916 | — | — | | EVP, Chief Financial Officer | July 13, 2022 | PRSA | — | — | 206,000 | 3,186,820 | | (Principal Financial Officer) | September 27, 2022 | RSA | 37,147 | 574,664 | — | — | | | July 13, 2023 | RSU | 123,213 | 1,906,105 | — | — | | | July 13, 2023 | PSU | — | — | 246,426 | 3,812,210 | | William Jackman(6) | August 12, 2021 | PRSA | — | — | 206,000 | 3,186,820 | | EVP, General Counsel | September 27, 2022 | RSA | 371,471 | 5,746,656 | — | — | | | July 13, 2023 | RSA | 123,213 | 1,906,105 | — | — | | | July 13, 2023 | PRSA | — | — | 246,426 | 3,812,210 | | Jason Chung(7) | June 30, 2022 | RSA | 30,678 | — | | | | EVP, Head of Corporate Development & Strategy | July 13, 2022 | PRSA | — | — | 206,000 | 3,186,820 | | | July 13, 2023 | RSA | 123,213 | 1,906,105 | — | — | | | July 13, 2023 | PRSA | — | — | 246,426 | 3,812,210 |
Outstanding Equity Awards at Fiscal Year End Table
| (1) All awards were granted under the 2019 Equity Plan pursuant to equity award agreements between the NEOs and the Company as of the grant date shown. RSAs and RSUs vest upon specified vesting dates (e.g., vesting in arrears following the end of each fiscal year completed after the grant date), provided the recipient’s service with the Company has not ceased prior to the vesting date. Unvested PRSAs and PSUs are eligible to vest upon the Company’s achievement of specified Performance Objectives and targets (specified under the 2021 Performance Plan and the LTIP, as applicable), provided the recipient’s service with the Company has not ceased prior to the date the Compensation Committee certifies the achievement of the Performance Objectives and targets (or a portion thereof) relating to the awards, as specified under the 2021 Performance Plan or the LTIP, as applicable. For additional information regarding the 2021 Performance Plan and the LTIP, see “Long-Term Equity Incentives” on page 41 of this Proxy Statement. Subject to any provisions relating to accelerated vesting upon a change in control or post- |
Outstanding Equity Awards at Fiscal Year End Table
| termination, unvested RSAs and PRSAs are subject to forfeiture if a separation from service occurs prior to the vesting event. See “Potential Post-Employment Benefits” on page 58 of this Proxy Statement. |
Outstanding Equity Awards at Fiscal Year End Table
| (2) Based on the closing price per share of our common stock on December 29, 2023 of $15.47, as reported on the Nasdaq Capital Market. |
Outstanding Equity Awards at Fiscal Year End Table
| (3) Mr. Les’s outstanding equity awards as of December 31, 2023 include: (a) 1,485,884 RSAs originally granted on September 27, 2022 in connection with Mr. Les’ service as CEO which vest on June 1, 2024, (b) 328,334 unvested PRSAs which were originally granted on August 12, 2021 pursuant to the 2021 Performance Plan which were eligible to vest, if at all upon certification by the Compensation Committee, (c) 184,820 RSAs granted July 13, 2023 under the Company’s LTIP established by the Compensation Committee under the Company’s 2019 Equity Plan which are eligible to vest as to one-third (1/3) per year through July 1, 2026, and (d) up to a maximum of 369,640 unvested PRSAs which are eligible to vest, if at all, July 31, 2026. The vesting of PRSAs is contingent upon Riot’s achievement of specified Performance Objectives, and the final number of vested PRSAs may be less than the Target Award, depending on the Company’s future performance. |
Outstanding Equity Awards at Fiscal Year End Table
| (4) Includes: (a) 1,485,884 RSAs granted on September 27, 2022 in connection with Mr. Yi’s service as Executive Chairman which vest on June 1, 2024, (b) 328,334 unvested PRSAs which were originally granted on August 12, 2021 pursuant to the Performance Plan which were eligible to vest, if at all upon certification by the Compensation Committee, (c) 184,820 RSAs granted July 13, 2023 under the LTIP which are eligible to vest as to one third (1/3) per year through July 1, 2026, and (d) up to a maximum of 369,640 unvested PRSAs which are eligible to vest, if at all, July 31, 2026. The vesting of PRSAs is contingent upon Riot’s achievement of specified Performance Objectives, and the final number of vested PRSAs may be less than the Target Award, depending on the Company’s future performance. |
Outstanding Equity Awards at Fiscal Year End Table
| (5) Includes: (a) 25,140 RSAs granted on April 12, 2022 in connection with Mr. Yee’s service with the Company which ratably vest each quarter through April 12, 2024, (b) 206,000 unvested PRSAs which were originally granted on July 13, 2022 pursuant to the 2021 Performance Plan which were eligible to vest, if at all upon certification by the Compensation Committee, (c) 37,147 RSAs granted on September 27, 2022 in connection with Mr. Yee’s continued service as the Company’s Chief Financial Officer which vest on June 1, 2024, (d) 123,213 RSUs granted July 1, 2023 under the LTIP which are eligible to vest as to one-third (1/3) per year through July 1, 2026, and (d) up to a maximum of 246,426 unvested PSUs which are eligible to vest, if at all, July 31, 2026. The vesting of PRSAs and PSUs is contingent upon Riot’s achievement of specified Performance Objectives, and the final number of vested PRSAs may be less than the Target Award, depending on the Company’s future performance. |
Outstanding Equity Awards at Fiscal Year End Table
| (6) Includes: (a) 371,471 RSAs granted on September 27, 2022 in connection with Mr. Jackman’s service as EVP and General Counsel which vest on June 1, 2024, (b) 206,000 unvested PRSAs which were originally granted on August 12, 2021 pursuant to the 2021 Performance Plan which were eligible to vest, if at all upon certification by the Compensation Committee, (c) 123,213 RSAs granted July 13, 2023 under the LTIP which are eligible to vest as to one-third (1/3) per year through July 1, 2026, and (d) up to a maximum of 246,426 unvested PRSAs which are eligible to vest, if at all, July 31, 2026. The vesting of PRSAs is contingent upon Riot’s achievement of specified Performance Objectives, and the final number of vested PRSAs may be less than the Target Award, depending on the Company’s future performance. |
Outstanding Equity Awards at Fiscal Year End Table
| (7) Includes: (a) 30,678 RSAs granted on June 30, 2022 in connection with Mr. Chung’s service with the Company which ratably vest each quarter through March 31, 2024, (b) 206,000 unvested PRSAs which were originally granted on July 13, 2022 pursuant to the 2021 Performance Plan which were eligible to vest, if at all upon certification by the Compensation Committee, (c) 123,213 RSUs granted July 1, 2023 under the LTIP which are eligible to vest as to one-third (1/3) per year through July 1, 2026, and (d) up to a maximum of 246,426 unvested PRSAs which are eligible to vest, if at all, July 31, 2026. The vesting of PRSAs is contingent upon Riot’s achievement of specified Performance Objectives, and the final number of vested PRSAs may be less than the Target Award, depending on the Company’s future performance. |
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table presents, for each of the NEOs, the number of shares of Riot’s common stock underlying the stock options and stock grants which vested during 2023, as well as the aggregate value realized upon the exercise of such vested options and the settlement of such vested of stock grants.
Option Exercises and Stock Vested Table
| | | Option Awards | | Stock Awards | | | | | Number of | | Number of | | | | | Shares | Value | Shares | Value | | | | Acquired | Realized | Acquired | Realized | | | | Upon | Upon | Upon | Upon | | | Type of | Exercise | Exercise | Vesting | Vesting (1) | | Name | Award | (#) | ($) | (#) | ($) | | Jason Les | PRSA | — | — | 33,334 | 140,669 | | Chief Executive Officer (Principal Executive Officer) | RSA | — | — | 1,485,884 | 18,439,820 | | | PRSA | — | — | 16,666 | 280,989 | | Benjamin Yi | PRSA | — | — | 33,334 | 140,669 | | Executive Chairman | RSA | — | — | 1,485,884 | 18,439,820 | | | PRSA | — | — | 16,666 | 280,989 | | Colin Yee | PRSA | — | — | 24,000 | 101,280 | | EVP, Chief Financial Officer (Principal Financial Officer) | RSA | — | — | 12,571 | 77,312 | | | RSA | — | — | 37,147 | 460,994 | | | RSA | — | — | 12,571 | 155,252 | | | RSA | — | — | 12,571 | 221,878 | | | PRSA | — | — | 12,000 | 202,320 | | | RSA | — | — | 12,571 | 115,653 | | William Jackman | PRSA | — | — | 24,000 | 101,280 | | EVP, General Counsel | RSA | — | — | 371,471 | 4,609,955 | | | PRSA | — | — | 12,000 | 202,320 | | Jason Chung | PRSA | — | — | 24,000 | 101,280 | | EVP, Head of Corporate Development | RSA | — | — | 30,674 | 306,433 | | | RSA | — | — | 30,674 | 362,567 | | | PRSA | — | — | 12,000 | 202,320 | | | RSA | — | — | 30,674 | 286,188 | | | RSA | — | — | 30,674 | 474,527 |
Option Exercises and Stock Vested Table
| (1) Calculated by multiplying (i) the fair market value of Riot’s common stock on the vesting date, which was determined using the closing price on the Nasdaq Capital Market of a share of Riot’s common stock on the date of vesting, or if such day falls on a weekend or holiday, on the immediately preceding trading day, by (ii) the number of shares of Riot’s common stock underlying the vested RSA or PRSA, as appropriate. |
CEO Pay Ratio
CEO Pay Ratio We are required under Item 402(u) of Regulation S-K to calculate and disclose our “CEO pay ratio”. We conduct our business within the continental United States and as of December 31, 2023, we had 534 employees, of whom approximately 0.7% are located outside the United States. We have not excluded employees located outside the United States when identifying the median employee. For 2023, the median annual total compensation of all employees of the Company, excluding our Chief Executive Officer, was $54,255.30, and the annual total compensation of our Chief Executive Officer was $13,490,590, as reported in the “Summary Compensation Table” on page 53 of this Proxy Statement. Accordingly, the ratio of our CEO’s annual total compensation to the median annual compensation of all employees (excluding the Chief Executive Officer) was 249:1. We used total compensation to determine the median employee as of December 31, 2023, which includes (i) annual base salary plus annual incentives paid to salaried employees and (ii) hourly salary rate times annual hours plus additional adjustments for annual incentives, shift differentials, actual overtime rates, and other cash allowances paid to hourly employees and any equity granted to eligible employees. The ratio and annual total compensation amount of the median employee are reasonable estimates that have been calculated using methodologies and assumptions permitted by SEC rules. The Company notes that its ratio and annual total compensation amount may not be directly comparable to those of other companies because the methodologies and assumptions used to identify the median employee may vary significantly among companies.
Pay vs. Performance
Pay vs. Performance The following tables summarize the relationship between executive compensation for our principal executive officer (also known as our “CEO”), other NEOs, and financial performance measures for the Company’s four (4) most recently completed fiscal years, calculated in accordance with Item 402(v) of Regulation S-K. The disclosure included in this section is prescribed by SEC rules and Section 953(a) of the Dodd-Frank Act, and it does not necessarily align with how the Company or the Compensation Committee views the link between the Company’s performance and compensation paid to its NEOs. For discussion of how Riot views its executive compensation, including alignment with the Company’s performance, see “Compensation Discussion and Analysis” beginning on page 34 of this Proxy Statement. Please review the tables and associated narrative and graphical disclosure together for a more complete presentation of such relationship over the periods presented.
Pay vs. Performance
| | | | | | Average | | | | | | | | | | | | Summary | Average | Value of Initial Fixed | | | Company | | | Summary | Summary | | | Compensation | Compensation | $100 Investment | | | Selected | | | Compensation | Compensation | Compensation | Compensation | Table Total | Actually Paid | Based On: | | Net | Measure | | | Table Total | Table Total for | Actually | Actually Paid to | Paid | to | | Peer | Income (loss) | Adjusted | | | for | Mr. | Paid to | Mr. | to non-PEO | non-PEO | | Group | (in | EBITDA | | | Mr. Les(1) | McGonegal(2) | Mr. Les(3) | McGonegal(3) | NEOs(4) | NEOs(3)(4) | TSR | TSR(5) | thousands) | (in | | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | thousands)(7)($) | | 2023 | 13,490,590 | — | 42,806,252 | — | 9,658,511 | 18,573,480 | 1,381.25 | 146.52(6) | (49,472) | 214,021 | | 2022 | 21,500,269 | — | 4,979,102 | — | 7,788,383 | 377,785 | 302.68 | 105.56 | (509,553) | (67,193) | | 2021 | 21,876,868 | 18,196,470 | 23,262,732 | 10,634,670 | 17,197,333 | 12,682,777 | 1,993.75 | 134.57 | (15,437) | 74,909 | | 2020 | — | 698,581 | — | 1,934,593 | 401,970 | 2,243,803 | 1,516.96 | 118.36 | (14,107) | (7,769) |
Pay vs. Performance
| (1) Mr. Les became the Chief Executive Officer of Riot and its principal executive officer on February 8, 2021, succeeding Jeffrey McGonegal. Amounts reported for 2021 include all compensation paid to Mr. Les during the year, as reported on the Summary Compensation Table (“SCT”), in their entirety. |
Pay vs. Performance
| (2) Mr. McGonegal served as Riot’s Chief Executive Officer (principal executive officer) from February 15, 2019, and as Chief Executive Officer and Chief Financial Officer (principal financial officer) from his appointment as of August 15, 2019, until he was succeeded by Mr. Les as Chief Executive Officer. Thereafter, Mr. McGonegal continued in his role as Chief Financial Officer until his retirement and transition to his present role as Senior Advisor to the Company as of September 26, 2022. Accordingly, the amounts reported for 2021 include the total compensation paid to Mr. McGonegal for 2021, as reported on the SCT, in their entirety. |
Pay vs. Performance
| (3) Compensation Actually Paid (“CAP”) reflects the total compensation reported in the SCT for the applicable year adjusted to include or exclude the amounts shown in the tables below for Riot’s NEOs: |
Compensation Actually Paid vs. Total Shareholder Return
Compensation Actually Paid vs. Total Shareholder Return Due to the relative nascence of our industry, prior to 2023 we did not compare our performance against a self-constructed peer group or used a Published Industry Index. We established a Peer Group as of 2023. As such, we previously utilized the Russell 2000 Index. Below the graph shows a comparison of the Company’s TSR and the Russell 2000 Index assuming a $100 investment in the Company and in the Russell 2000 Index for the period starting December 31, 2019, that was held through the end of each year listed in the first table set forth above, as it compares to CAP. Historical stock performance is not necessarily indicative of future stock performance. The following graph shows a comparison of the Company’s TSR and that of the members of our Peer Group with available publicly traded market data as of, and subsequent to, December 31, 2018, that consists of: Marathon Digital Holdings, Inc. (MARA), Hut 8 Corp. (HUT), CleanSpark, Inc. (CLSK), HIVE Digital Technologies, Ltd. (HIVE), Bit Digital, Inc. (BTBT), TeraWulf Inc. (WULF), and Mawson Infrastructure Group, Inc. (MIGI), as it compares to CAP.
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Net Income As shown in the chart below, the year-over-year changes in our CAP from 2020 to 2021, from 2021 to 2022, and from 2022 to 2023 generally tracked along the same trendline as our Net Income over the same period, increasing from 2020 to 2021, decreasing from 2021 to 2022, and then increasing again from 2022 to 2023. This is largely due to our overall compensation mix, a substantial portion of which is equity-based and heavily impacted by our stock price. Year-over-year changes in PEO CAP over the same period is more pronounced due to the impact of equity-based compensation, which makes up a larger portion of the total target direct compensation paid to our PEOs than they do for our other NEOs and we issued a substantial initial service-based equity award to Mr. Les upon his appointment as CEO (PEO) as of February 8, 2021, and on September 27, 2022, half of which remain unvested, in addition to the performance-based equity awards granted to all NEOs upon our adoption of a performance-incentive equity compensation program under our 2019 Equity Plan as of August 12, 2021, the fair value of which was recorded in 2021 and performance-based equity awards granted to all NEOs under our LTIP as of July 13, 2023, the fair value of which was recorded for 2023, but vest over three years.
Compensation Actually Paid vs. Adjusted EBITDA
Compensation Actually Paid vs. Adjusted EBITDA As shown in the chart below, the year-over-year changes in our CAP from 2020 to 2021, from 2021 to 2022, and from 2022 to 2023 generally tracked along the same trendline as our Adjusted EBITDA over the same period, increasing from 2020 to 2021, decreasing from 2021 to 2022, and increasing from 2022 to 2023. The 2022 decrease in Adjusted EBITDA was largely due to impairment charges to certain intangible assets, including the Bitcoin we held following the decline in the market value of Bitcoin during that period, which the Company adjusted for in 2022. The changes in CAP are primarily due to our overall pay mix, a large portion of which is equity-based and heavily impacted by stock price, as discussed above. The 2023 increase in Adjusted EBITDA was largely due to a substantially smaller Net Income (loss) recorded to our books and increased Bitcoin Mining and power credits as disclosed in our 2023 Annual Report.