DEF 14A: Cipher Mining Seeks Stockholder Approval for Officer Exculpation and Director Elections at Upcoming Annual Meeting

Cipher Mining's upcoming annual meeting on May 2, 2024, will include proposals for director elections, ratification of the accounting firm, and an amendment to exculpate officers from certain liabilities.

Summary

• Cipher Mining Inc. will hold its 2024 annual meeting of stockholders virtually on May 2, 2024, at 8 a.m. Eastern Time.
• Stockholders will vote on the election of Tyler Page and Cary Grossman as Class III directors, each serving until the 2027 annual meeting.
• They will also vote to ratify the appointment of Marcum LLP as the company's independent registered public accounting firm for 2024.
• A key proposal involves amending the company's Second Amended and Restated Certificate of Incorporation to provide for exculpation of officers from breaches of fiduciary duty, to the fullest extent permitted by Delaware law.
• The board of directors recommends voting in favor of all proposals.
• Holders of record of common stock as of March 7, 2024, are entitled to vote.
• As of the record date, there were 296,493,433 shares of common stock issued and outstanding and entitled to vote.
• The proxy statement and annual report are available at www.proxyvote.com.

Sentiment

Score: 7

Explanation: The document is primarily informational and procedural, with a slightly positive sentiment due to the focus on attracting and retaining talent and enhancing corporate governance.

Positives

• The proposed amendment to exculpate officers from certain liabilities could enhance the company's ability to attract and retain top talent.
• The virtual meeting format aims to provide expanded access and cost savings for stockholders.
• The board emphasizes the importance of stockholder votes to ensure a quorum and avoid further solicitation expenses.

Risks

• Failure to approve the amendment for officer exculpation could impact the company's ability to recruit and retain qualified officers.
• If stockholders do not ratify the selection of Marcum LLP, the Board and the Audit Committee will take this fact into consideration in determining whether it is appropriate to select a different firm.
• The Investors rights under the Board Observer Agreement will terminate upon the date that the Investors no longer beneficially own at least 10% of the outstanding shares of common stock.

Future Outlook

The company is focused on attracting and retaining top talent and ensuring effective corporate governance.

Management Comments

• Tyler Page, Chief Executive Officer, expressed appreciation for stockholders' continued support.
• The Board believes that our current leadership structure of Chief Executive Officer and Chairperson of the Board being held by two separate individuals, with the Chairperson qualified as independent and serving as lead director, is in the best interests of the Company and its stockholders and strikes the appropriate balance between the Chief Executive Officers responsibility for the strategic direction, day-to day-leadership and performance of our Company and the Chairpersons responsibility to guide overall strategic direction of our Company and provide oversight of our corporate governance and guidance to our Chief Executive Officer and to set the agenda for and preside over Board meetings.

Industry Context

The proposal to exculpate officers reflects a broader trend in corporate governance to align officer protections with those of directors, particularly in light of evolving legal standards.

Comparison to Industry Standards

• The exculpation of officers is in line with the 2022 amendment to Section 102(b)(7) of the General Corporation Law of the State of Delaware, or the DGCL, which was amended, or Amended 102(b)(7), to enable a corporation to include in its certificate of incorporation a provision exculpating certain corporate officers from liability for breach of the fiduciary duty of care in certain circumstances.
• Many companies, such as Apple, Microsoft, and Google, have similar provisions in their corporate governance documents to attract and retain top executive talent.
• The virtual meeting format is becoming increasingly common, with companies like Amazon and Berkshire Hathaway adopting similar approaches to enhance accessibility and reduce costs.

Related Party Transactions

• On April 8, 2022, the Company entered into a waiver agreement with Bitfury Top HoldCo (the Waiver Agreement), pursuant to which the Company waived certain restrictions on transfer of Common Stock under (a) that certain Lock-up Agreement, dated as of August 26, 2021, by and between GWAC and Bitfury Top HoldCo and (b) those certain Lock-up Agreements, dated August 26, 2021, by and between GWAC and each of (i) I-B Goodworks, LLC, (ii) Magnetar Financial LLC, (iii) Mint Tower Capital Management B.V., (iv) Periscope Capital, Inc. and (v) Polar Asset Management Partners Inc., respectively (the stockholders contemplated by clauses (a)-(b), the Stockholders) imposing similar restrictions on the Stockholders (collectively, the Lock-up Agreements and each a Lock-up Agreement).
• On April 8, 2022, the Company also entered into an observer agreement (the Board Observer Agreement) with Bitfury Holding and Bitfury Top HoldCo (together with Bitfury Holding, the Investors), which provides that the Investors have the right to designate a representative to serve as an observer of the Board and any committees thereof (subject to exceptions and limitations specified in the Board Observer Agreement).
• On August 26, 2021, in connection with the Business Combination, Bitfury Top HoldCo and Cipher entered into the Master Services and Supply Agreement.
• On February 28, 2024, the Company and Bitfury Top HoldCo terminated the Master Services and Supply Agreement.

Stakeholder Impact

• Approval of the officer exculpation amendment could benefit stockholders by enhancing the company's ability to attract and retain qualified officers.
• The virtual meeting format aims to provide expanded access and cost savings for stockholders.
• Employees may be impacted by changes in executive compensation and benefits.

Next Steps

• Stockholders should vote on the proposals outlined in the proxy statement.
• The company will file a Certificate of Amendment with the Delaware Secretary of State if the amendment is approved.
• The Board will continue to periodically review our leadership structure and make such changes in the future as it deems appropriate and in the best interests of the Company and its stockholders.

Key Dates

Keywords

annual meeting, proxy statement, director election, officer exculpation, Marcum LLP, corporate governance, stockholders, board of directors, Cipher Mining