The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

April 19, 2021

Director Compensation: A Baby Step Into Bitcoin

Liz Dunshee

Last week, MicroStrategy – a small-cap company that trades on the Nasdaq Global Select Market – filed this Form 8-K to announce that its four independent directors will now receive compensation in the form of Bitcoin instead of cash. Here’s the stated rationale:

In approving Bitcoin as a form of compensation for Board service, the Board cited its commitment to Bitcoin given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.

It works with the company’s business strategy – here’s an excerpt from the Form 10-K:

MicroStrategy® pursues two corporate strategies in the operation of its business. One strategy is to grow our enterprise analytics software business and the other strategy is to acquire and hold Bitcoin.

MicroStrategy held over a billion dollars of digital assets at the end of the year, which this article says jumped to nearly $5 billion last month when the company made additional Bitcoin purchases. HSBC has even categorized it as a “virtual currency product” (and banned its online customers from trading the company’s shares).

However, the board fees here will actually still be nominally denominated in dollars – which helps the company avoid some of the disclosure & risk issues that would otherwise exist. At the time of payment, the fees will be converted from USD into Bitcoin by the payment processor and then deposited into the digital wallet of the applicable non-employee director. So this is a baby step into Bitcoin compensation, not a leap.

If you’re curious about cryptocurrency as compensation, check out the webcast transcript from our 2019 program on that topic.