Form 4: Marathon Digital Holdings CFO Receives Performance-Based Restricted Stock Units

Salman Hassan Khan, CFO of Marathon Digital Holdings, was granted long-term incentive performance-based restricted stock units (LTIP Performance RSUs) on May 1, 2024, with vesting contingent on the company's total stockholder return (TSR).

Summary

• Salman Hassan Khan, the Chief Financial Officer of Marathon Digital Holdings, received a grant of long-term incentive performance-based restricted stock units (LTIP Performance RSUs) on May 1, 2024.
• The grant was made under the Issuer's 2018 Equity Incentive Plan.
• Each LTIP Performance RSU represents a contingent right to receive one share of Marathon Digital Holdings' common stock.
• The number of LTIP Performance RSUs reported is 1,083,293, representing the maximum achievable award for 2024, which is 200% of the target award.
• The actual number of shares vesting will depend on Marathon Digital Holdings' achievement of a pre-determined performance metric relating to total stockholder return (TSR).
• If the company achieves 200% of the target TSR metric, the number of LTIP Performance RSUs earned will be equal to $22,500,000 divided by the average closing price over the prior 100 consecutive trading days as determined on the Grant Date.
• The vesting schedule is as follows: 25% on January 31, 2025, and the remaining 75% in 12 quarterly installments of 6.25% thereafter, contingent on continued service.

Sentiment

Score: 7

Explanation: The announcement is generally positive as it incentivizes management to improve shareholder value. The performance-based nature of the award suggests confidence in the company's future prospects.

Positives

• The performance-based nature of the LTIP Performance RSUs aligns management's interests with those of the shareholders, incentivizing them to improve total stockholder return (TSR).

Risks

• The actual number of shares vesting is contingent on the company's performance against the TSR metric, meaning the CFO may receive fewer shares than the reported maximum if the company underperforms.
• The vesting schedule is dependent on the Reporting Person's continued service to the Issuer through each vesting date.

Future Outlook

The number of LTIP Performance RSUs that will ultimately vest depends on the company's achievement of the TSR target metric, ranging from 0% to 200% of the target. Vesting occurs over time, subject to continued service.

Industry Context

In the competitive cryptocurrency mining industry, equity-based compensation is a common tool to attract and retain key executives. Performance-based RSUs are designed to align executive compensation with shareholder value creation, which is particularly important in a volatile sector like cryptocurrency.

Comparison to Industry Standards

• Companies like Riot Platforms and CleanSpark also utilize equity-based compensation, including restricted stock units and performance-based awards, to incentivize their executives.
• The vesting schedules and performance metrics often vary, but the underlying principle of aligning executive compensation with shareholder returns remains consistent across the industry.
• The size of the award, valued at up to $22,500,000, is significant and suggests a strong emphasis on incentivizing the CFO to drive shareholder value.

Stakeholder Impact

• Shareholders: The performance-based compensation structure aims to align management's interests with shareholder value creation.
• Employees: The equity incentive plan can boost employee morale and motivation by providing a stake in the company's success.
• Management: The LTIP Performance RSUs provide a significant incentive for the CFO to drive positive TSR.

Next Steps

• The company's performance will be monitored to determine the actual number of LTIP Performance RSUs that will vest.
• The first vesting date is January 31, 2025, with subsequent vesting occurring quarterly.

Key Dates