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Coinbase Direct Listing Reveals Payday for New Legal Chief (1)

Feb. 25, 2021, 6:07 PMUpdated: Feb. 25, 2021, 6:39 PM

Coinbase Global Inc. Chief Legal Officer Paul Grewal earned more than $18 million in total compensation after being hired last year, according to a prospectus for a direct listing filed Thursday by the company.

The bulk of Grewal’s pay comprised $7.6 million in stock awards and over $10.1 million in option awards. He also received a $100,000 bonus and a base salary of nearly $210,000 after joining the company in August.

Coinbase, which in December confidentially filed papers to go public, is being advised by the law firm Fenwick & West for its direct listing on the Nasdaq exchange. Legal fees and expenses related to the direct listing—a first by a major U.S. cryptocurrency exchange—are not yet available.

Coinbase’s plan to go public comes as the price of bitcoin has surged, potentially pushing the San Francisco-based company’s market capitalization toward $100 billion. No price has been set for shares that will be sold.

Grewal, a former deputy general counsel at Facebook Inc., made headlines last summer when Coinbase announced his hire. The company’s recruitment of Grewal—who succeeded former legal chief Brian Brooks, who last year sold off $4.6 million in Coinbase stock—signaled a hot market for lawyers with digital currency expertise.

Coinbase, which earlier this month named a new compliance chief, has been busy over the past year adding legions of in-house lawyers to build out its team under Grewal. The company did see some employees leave last year following a controversial ban on political activism in the workplace.

Coinbase CEO Brian Armstrong, who founded the company in 2012, had a total compensation package of nearly $60 million last year. The 38-year-old Armstrong received $1 million in base salary with the bulk of his remuneration coming in the form of stock options and awards.

Fenwick, like many of its Silicon Valley rivals, owns a stake in its soon-to-be-public client. Coinbase’s prospectus states that “individuals and entities associated” with Fenwick “beneficially own an aggregate of less than 0.01% of our capital stock, which will convert to Class B common stock in connection with this offering.”

Fenwick counseled the company last year on its acquisition of Tagomi Systems Inc., a cryptocurrency brokerage backed by former lawyer-turned-billionaire Peter Thiel, a prominent supporter of cryptocurrencies. In January, Fenwick advised Coinbase on its reported $80 million buy of Bison Trails Co., a blockchain technology startup.

Fenwick corporate partners Mark Stevens, Michael Brown, Ran Ben-Tzur, and Faisal Rashid, as well as associate Jennifer Hitchcock, are leading a team from the firm advising Coinbase as it prepares to go public.

Latham & Watkins is representing financial advisers on Coinbase’s listing led by the Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Allen & Co. LLC, and Citigroup Global Markets Inc. Latham advised Tagomi on its sale to Coinbase last year.

At the top of Coinbase’s prospectus, the company symbolically listed a bitcoin address for bitcoin creator Satoshi Nakamoto, whose actual identity has never been definitively disclosed.

“The identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins,” is stated by Coinbase as one of several potential events that could adversely affect the “broader cryptoeconomy” and the company’s stock price going forward.

The privately held company’s investors include venture capital firm Andreessen Horowitz, whose first female partner, former federal prosecutor Kathryn Haun, is a member of Coinbase’s board of directors. Haun has stock awards in Coinbase valued at nearly $6 million, per the company’s prospectus.

(Clarifies throughout that Coinbase is using a direct listing to go public.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com
John Hughes at jhughes@bloombergindustry.com

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