May 13, 2021 - Economy

Coinbase announces changes to employee pay policy

Data: FactSet; Chart: Axios Visuals

The transition from fast-growing crypto service provider to mature multi-billion-dollar public company is not an easy one.

Why it matters: Coinbase is the first big company to make that transition, and has already changed dramatically as a result.

Driving the news: Coinbase this week announced big new changes to the way it pays employees, including higher salaries all round and an ironclad "no negotiation" policy when hiring.

  • Equity grants will also vest over one year, rather than four.

Context: Coinbase CEO Brian Armstrong lost about 60 of his employees last October when they took an exit package rather than sign on to a new policy barring political discussion at work. In doing so, he staked out a clear position on one side of Silicon Valley's culture war.

  • That's created some skepticism around the new policy, which chief people officer L.J. Brock claims was designed, at least in part, to ensure than women and underrepresented minorities are not left behind.

The big picture: Many Coinbase employees became dynastically wealthy when the company went public; many others have similarly achieved massive wealth during the current crypto boom. But the days of joining Coinbase on a relatively modest salary, in the hope of a massive future windfall, are clearly over — especially with Coinbase stock falling rather than rising.

  • Coinbase therefore needs to start attracting a very different kind of employee — people who want a good, steady salary.

My thought bubble: Fairness might not be the motivation here, and it might not ever arrive, given the well-documented company culture and what Brock characterizes as "our rigorous performance management process."

  • That said, fairness (or slightly more fairness) is likely to be a side-effect — assuming that Coinbase sticks to its policy and doesn't allow rivals like BitGo to troll them into reversing it.

What to watch: Coinbase reports its first-ever earnings as a public company after the close today.

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