TABLE OF CONTENTS
TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THE ANNUAL MEETING | 1 | | |
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PROPOSAL NO. 1:ELECTION OF DIRECTORS | 7 | | |
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INFORMATION REGARDING DIRECTORS | 8 |
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CORPORATE GOVERNANCE | 15 |
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CORPORATE CODE OF CONDUCT | 15 |
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Board’S Role in Corporate Governance Matters | 15 |
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Board Structure and Independence | 16 |
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Board Leadership | 16 |
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Board’S Role in Risk Oversight | 17 |
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Director Attendance at Board, Committee, and Other Meetings | 17 |
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Communications with the Board | 18 |
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Committees of the Board of Directors | 18 |
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Audit Committee | 18 |
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report of the audit Committee | 20 |
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Compensation and human resources committee | 22 |
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governance and nominating committee | 23 |
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EXECUTIVE OFFICERS AND MANAGEMENT | 24 |
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EXECUTIVE COMPENSATION | 25 |
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summary compensation table | 25 |
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equity compensation plan information | 26 |
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outstanding equity awards at fiscal year-end | 27 |
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executive employment agreements | 27 |
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potential post-employment benefits | 29 |
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DIRECTOR COMPENSATION | 30 |
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OTHER MATTERS | 33 | | |
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| 
RIOT BLOCKCHAIN, INC. 202 6th
3855 Ambrosia Street, Suite 401301
Castle Rock, CO 8010480109 FOR THE 20212022 ANNUAL GENERAL MEETING OF STOCKHOLDERS
This Proxy Statement, along with the accompanying Notice of 20212022 Annual General Meeting of Stockholders (the “Notice”), contains information about the 20212022 Annual General Meeting of the stockholders of Riot Blockchain, Inc.,Stockholders, including any adjournments or postponements thereof (referred to herein as the(the “Annual Meeting”) . of Riot Blockchain, Inc. In this Proxy Statement, we refer to Riot Blockchain, Inc., a Nevada corporation, and its consolidated subsidiaries, as “Riot,” “Riot Blockchain,” the “Company,” “we,” “us” or “our.” We are holding the Annual Meeting at 9:00 a.m. (Eastern Time) on Tuesday, October 19, 2021,Wednesday, July 27, 2022, or such later date or dates as such Annual Meeting date may be adjourned.adjourned or postponed. Due to the ongoing impacts of the COVID-19global coronavirus (COVID-19) pandemic and in the interest of the health and safety of our stockholders, employees and community partners, the Annual Meeting will be held entirely online via the virtual meeting portal, www.virtualstockholdermeeting.com/RIOT2021RIOT2022, and no option to attend the Annual Meeting in-person will be available. For specific instructions on how to attend the Annual Meeting, please see “ How do I vote?” beginning on page 2, below. This Proxy Statement, the accompanying proxy card and, though not part of this Proxy Statement, our 20202021 Annual Report on Form 10-K, as amended on Form 10-K/A are all being mailed on or about September 21, 2021June [•], 2022 to all stockholders of record (as defined below) entitled to notice of and to vote at the Annual Meeting (see “Who canmay vote?” below). Our 2019 Annual Report to stockholders is not part of these proxy solicitation materials and is not incorporated by reference herein. Copies of this Proxy Statement and our 20202021 Annual Report are available at www.proxyvote.com. You can also find copies of our 20202021 and 20192020 Annual Reports on Form 10-K, and amendments thereto on Form 10-K/A, as well as all of our periodic and current reports filed with the U.S. Securities and Exchange Commission (the “SEC”) on the Internet on the SEC’s website, www.SEC.gov, or through the “Investors” section of our website at www.RiotBlockchain.com. Except for those reports we have filed with the SEC, and as specifically incorporated by reference herein, the information contained on our website is not part of these proxy solicitation materials. TABLE OF CONTENTS In this Proxy Statement, we refer to Riot Blockchain, Inc., a Nevada corporation, and its consolidated subsidiaries, as “Riot,” “Riot Blockchain,” the “Company,” “we,” “us” or “our.”
General Information about the Annual MeetingGENERAL INFORMATIONWe include this Q&A sectionthese questions and answers to provide some background information and brief answers to several questions you might have about the Annual Meeting.clarity concerning voting, solicitation and other general information. We encourage you to read the enclosedthis Proxy Statement carefully and in its entirety.
Why am I receiving this Proxy Statement? We sent you this Proxy Statement or a Notice of Internet Availability of Proxy Materials in connection with the solicitation by our Board of Directors (the “Board”) of proxies, inyour proxy to vote at the accompanying form, to be used at theCompany’s Annual Meeting (including any adjournments or postponements thereof).
What information is contained in this Proxy Statement? This Proxy Statement summarizes the information you need to know to vote on an informed basis. It contains information relating to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our directors and most highly paid executive officers, and other required information.
What is the purpose of the Annual Meeting? The purpose of the Annual Meeting is to obtain stockholder action on the matters outlined in the Notice of 2021 Annual Meeting of stockholders included with this Proxy Statement. These matters include: | 1. | The election of nominees to serve on the Board, including: |
| A.
| the election of one Class I director nominee to serve on the Board of Directors for a term expiring at the 20222025 Annual General Meeting of stockholders; |
2.
| B. | to ratify, in a non-binding vote, the election of two Class II directors to serve for terms expiring at the 2023 Annual Meeting of stockholders; and |
| C. | the election of two Class III directors to serve for terms expiring at the 2024 Annual Meeting of stockholders (see Proposal No. 1); |
| 2. | To ratify the appointmentengagement of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 (see Proposal No. 2);2022; |
3.
| 3. | To holdto approve, in an advisory, non-binding vote, the compensation of the Company’s named executive officers (“Say-on-Pay”); |
4.
| to authorize and approve that the Company’s current Articles of Incorporation be amended to increase the number of shares of common stock authorized for issuance thereunder from 170,000,000 shares to 340,000,000 shares and to increase the number of preferred stock authorized for issuance thereunder from 15,000,000 shares to 30,000,000 shares; and |
5.
| to approve the compensation of our named executive officers (see Proposal No. 3); |
| 4. | To approve the SecondThird Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan as amended, to increase the number of shares reserved for issuance under such planthereunder by 4,400,000 shares (See Proposal No. 4); and10,000,000. |
(Proposal No. 1) The election of one Class I director nominee to serve on the Board of Directors for a term expiring at the 2025 Annual General Meeting of Stockholders. | | | FOR the nominee | | | | | | | | | | | (Proposal No. 2) To transact such other businessratify, in a non-binding vote, the engagement of Marcum LLP as mayour independent registered public accounting firm for the fiscal year ending December 31, 2022. | | | FOR | | | | | | | | | | | (Proposal No. 3) To approve, in an advisory, non-binding vote, the compensation of the Company’s named executive officers (“Say-on-Pay”). | | | FOR | | | | | | | | | | | (Proposal No. 4) To authorize and approve that the Company’s current Articles of Incorporation be properly brought beforeamended to increase the Annual Meeting (including any adjournments or postponements thereof).number of shares of common stock authorized for issuance thereunder from 170,000,000 shares to 340,000,000 shares and to increase the number of preferred stock authorized for issuance thereunder from 15,000,000 shares to 30,000,000 shares. | | | FOR | | | |
TABLE OF CONTENTS (Proposal No. 5) To approve the Third Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 10,000,000 shares. | | | FOR | | | |
This Proxy Statement provides detailed information about each of these matters.
Who canmay vote? Only stockholders who owned shares
You may vote if you are a stockholder of our common stock, no par value per share, at the close of business on Thursday, September 9, 2021Tuesday, May 31, 2022 (the “Record Date”), are entitled to participate in and vote their shares at the Annual Meeting.as identified by our transfer agent. As of the Record Date, there were 95,951,269135,347,900 shares issued, and outstanding and entitled to vote at the Annual Meeting. Shares of our common stock, no par value per share, are herein referred to as the “shares.”
How many votes do I have ?Each stockholder of record (i.e., each person identified by our transfer agent as holding shares of our common stock as of the close of business on the Record Date) is entitled to one vote at the Annual Meeting for each share of common stock owned as of the Record Date. ThereCumulative voting is no cumulative voting.not permitted. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy. AllIf your proxy is properly submitted, you are legally designating the person or persons named on the proxy card to vote your shares represented byas you have directed. All valid proxies that we receive through this solicitation, which are not revoked, will be voted in accordance with your instructions you provide on the proxy card. Except as set forth below, if you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board’s recommendations as noted above. Voting by proxy will not affect your right to attend the Annual Meeting. How you may vote depends on how your shares are held. As explained below, the voting procedures are different for stockholders of record and for beneficial owners of our shares.
What is the difference between being a stockholder of record and a beneficial owner and how does this affect voting? Many of our stockholders hold their shares through stockbrokers,stock brokers, banks, or other nominees, rather than directly in their own names. As summarized below, there are some differences between being a stockholder of record and a beneficial owner.
Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Equiniti Trust Corporation, or if you possess stock certificates representing your shares, , you are the stockholder of record, and these proxy materials are being sent directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals named on the proxy card or to vote at the Annual Meeting. Meeting. If you are a stockholder of record, you may vote your shares at the Annual Meeting using any of the following methods: | · | Online. You may vote online by completing and submitting your proxy card via the online portal at www.proxyvote.com. |
Via the Internet Before the Annual Meeting. Vote online by visiting the online portal at www.proxyvote.com and completing and submitting your proxy card. You will need to follow the instructions on the website. Live Via the Internet During the Annual Meeting. If you wish to vote your shares live and online at the Annual Meeting, you may participate in the virtual webcast of the Annual Meeting and vote your shares on the proposals presented through the virtual portal established to host the Annual Meeting, www.virtualstockholdermeeting.com/RIOT2022, and entering the unique 16-digit control number provided to you on the proxy card accompanying this Proxy Statement. You will not be able to attend the Annual Meeting without your 16-digit control number. PLEASE DO NOT SHARE YOUR CONTROL NUMBER. By mail. Mark, sign, and date the enclosed proxy card and return it by mail in the enclosed postage prepaid envelope to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your proxy will be voted in accordance with your instructions. If you sign the proxy card but do not specify how you want your shares voted, they will be voted as recommended by the Board. By telephone. To vote via telephone, call 1-800-690-6903 and follow the telephone prompts. TABLE OF CONTENTS | · | Live at the Annual Meeting. If you wish to vote your shares live and online at the Annual Meeting, you may participate in the virtual webcast of the Annual Meeting and vote your shares on the proposals presented through the virtual portal established to host the Annual Meeting, www.virtualstockholdermeeting.com/RIOT2021, and entering the unique 16-digit control number provided to you on the proxy card accompanying this Proxy Statement. You will not be able to attend the Annual Meeting without your 16-digit control number. PLEASE DO NOT SHARE YOUR CONTROL NUMBER. |
| · | By mail. Mark, sign, and date the enclosed proxy card and return it by mail in the enclosed postage prepaid envelope to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Your proxy will be voted in accordance with your instructions. If you sign the proxy card but do not specify how you want your shares voted, they will be voted as recommended by the Board. |
| · | By telephone. You may vote your shares by submitting your proxy by telephone by dialing 1-800-690-6903. |
Beneficial Owners. If your shares are held in a stock brokerage account or by a bank or other nominee, you are the beneficial owner of shares held in “street name,” and thesename”. Your proxy materials are being forwarded to you by your broker or other nominee, who is considered to be the stockholder of record. As the beneficial owner, you have the right to tell your nominee how to vote, and you are also invited to attend the Annual Meeting virtually. However, since you are not the stockholder of record, you may not vote your shares at the Annual Meeting unless you obtain a legal proxy from your nominee authorizing you to do so. Your nominee has sent you instructions on how to direct the nominee’s vote. You may vote by following those instructions and the instructions on the Notice; and, if you are a beneficial owner, who obtained a legal proxy and is authorized to vote by your nominee, and you wish to submit your vote by telephone, you may do so by dialing 1-800-454-8683.
Do I need to attend the Annual Meeting to vote my shares?shares? You do not need to attend the Annual Meeting to vote your shares. Shares represented by valid proxies that are received in time for the Annual Meeting will be voted at the Annual Meeting unless they are revoked in advance of the meeting date. A stockholder may revoke a proxy before the proxy is voted by following the instructions under the heading “ May I change or revoke my proxy?” below. Any stockholder who has executed a proxy card but attends the Annual Meeting via the virtual meeting portal at www.virtualstockholdermeeting.com/RIOT2021 RIOT2022 may revoke the proxy and vote at the Annual Meeting by following the instructions under the heading “ How do I vote?” above.
A proxy is your legal designation of authority to another person (your proxy) to vote the shares you own. That other person is called a proxy. If you designate someone as your proxy, the document in which you make that designation also is called a proxy.
May I change or revoke my proxy? If you give ussubmit your proxy, you may changealter or revoke ityour proxy at any time beforeprior to the Annual Meeting. You may changealter or revoke your proxy in any one of the following ways: by signing a new proxy card and submitting in accordance with the instructions above; by re-voting via the Internet or by telephone as instructed above — note, only your latest Internet or telephone vote will be counted; by delivering a signed statement of revocation or a duly executed proxy card bearing a later date to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, and to our Corporate Secretary at: Riot Blockchain, Inc., 3855 Ambrosia Street, Suite 301, Castle Rock, Colorado 80109, Attention | · | by signing a new proxy card and submitting it as instructed above; |
| · | by re-voting by Internet or by telephone as instructed above — only your latest Internet or telephone vote will be counted; |
| · | by delivering a signed statement of revocation or a duly executed proxy card bearing a later date to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, and to our Corporate Secretary at: Riot Blockchain, Inc., 202 6th Street, Suite 401, Castle Rock, CO 80104, Attention: Corporate Secretary; or |
| · | by attending the Annual Meeting virtually and voting live and online during the Annual Meeting. Attending the Annual Meeting via the virtual meeting portal at www.virtualstockholdermeeting.com/RIOT2021 will not automatically revoke a previously submitted proxy unless you specifically request it. |
: Corporate Secretary; or by attending the Annual Meeting virtually and voting live, online during the Annual Meeting. Attending the Annual Meeting via the virtual meeting portal at www.virtualstockholdermeeting.com/RIOT2022 will not automatically revoke a previously submitted proxy unless you specifically request revocation. What should I do if I receive more than one proxy card ?You may receive more than one proxy card or voting instruction form if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described under “ How do I vote?” on the proxy card for each account to ensure that all of your shares are voted. Will my shares be voted if I do not return my proxy card? If your shares are registered in your name, they will not be voted if you do not submit your proxy card by mail, online via the portal at www.proxyvote.com, or by telephone by dialing 1-800-690-6903, or if you do not otherwise vote by attending the Annual Meeting and casting your shares using the unique 16-digit control number assigned to you on your Proxy Card. Please see the section of this Proxy Statement entitled “How do I vote?” beginning on page 2 above for specific instructions on how to vote your shares. Unless otherwise indicated under the section “ What vote is required to approve each proposal presented at the Annual Meeting” below, if you submit your proxy card without indicating youridentifying instructions as to how to vote your shares yourshould be voted, those shares will be voted in accordance with the Board’s recommendations, as permitted by ourthe Company’s Bylaws.
TABLE OF CONTENTS Brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on certain matters (“routine matters”), but do not have the discretion to vote uninstructed shares as to certain other matters (“non-routine matters”). Of the four (4)five (5) proposals being presented to the stockholders at the Annual Meeting, only Proposal No. 2 (the ratification of our independent registered public accounting firm) is considered a routine matter. The remaining three (3)four (4) proposals, Proposal No. 1 (election of directors), Proposal No. 3 (advisory vote to approve the compensation of our named executive officers), and Proposal No. 4 (vote to approve the Second Amendment to the Company’s Articles of Incorporation), and Proposal No. 5 (vote to approve the Third Amendment to the 2019 Riot Blockchain, Inc. 2019 Equity Incentive Plan) are each considered non-routine matters. This means that if your shares are held in street name and you do not provide voting instructions to the bank, broker or other nominee that holds your shares as described above under “ How Do I Vote?,” the bank, broker or other nominee has the authority, even if it does not receive instructions from you, to vote your unvoted shares for the sole routine matter being presented to the stockholders at the Annual Meeting, Proposal IINo. 2 (the ratification of our independent registered public accounting firm) . However, your bank, broker or other nominee that holds your shares would not have authority to vote yourthe unvoted shares for the three (3)four (4) non-routine matters being presented to the stockholders at the Annual Meeting, Proposal INo. 1 (election of directors)director), Proposal IIINo. 3 (advisory vote to approve the compensation of our named executive officers), Proposal No. 4 (vote to amend the Company’s Articles of Incorporation), and Proposal IVNo. 5 (vote to approve the SecondThird Amendment to the 2019 Riot Blockchain, Inc. 2019 Equity Incentive Plan). If your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter, or becauseif your broker chooses not to vote on a matter for which it does have discretionary voting authority, a “broker non-vote” has occurred. The effects of a broker non-vote on each of the proposals for which we are requesting stockholder votes are explained below. Shares that are subject to a broker non-vote are considered present at the Annual Meeting for determining whether the appliable quorum requirement has been met (see “ What is a quorum?” on page 6 of this Proxy Statement for further discussion of our quorum requirement for the Annual Meeting); however, shares subject to a broker non-vote will not be counted as a vote cast with respect to a proposal. Because abstentions and broker non-votes do not represent shares cast with respect to a proposal, broker non-votes will have no effect on the outcome of votes on any of the proposals put forth in this Proxy Statement, except, as required under Nevada law and identified in this Proxy Statement, as the outcome of the votes on these proposals are determined solely by reference to the votes cast by the shares entitled to vote that are present at the Annual Meeting or represented by a properly-submitted proxy. We encourage you to provide voting instructions. This ensures your shares will be voted at the Annual Meeting in the manner you desire.
What vote is required to approve each proposal presented at the Annual Meeting? Proposal No. 1: Election of Directors.Director. We are seeking stockholder votes on the election to the Board of the five director nominees identified in this Proxy Statement, including one Class I director nominee two Class II director nominees, and two Class III director nominees.as identified in this Proxy Statement. As permitted by Nevada law and our Bylaws, each classclasses of directors on our Board are elected by a plurality voting system. This means that those director nominees receiving the most “FOR” votes cast in favor of their election to the Board will be elected to the Board.You may vote “FOR” all or any one of the nominees,nominee, or you may “WITHHOLD” your vote from all of the nominees or from any one of the nominees.nominee. Votes that are withheld will not be included in the vote tally for the election of directorsthe director and thus will have no effect on the outcome of the vote on this proposal. If you submit your proxy card without directing your proxy how to vote your shares, your shares will be voted in accordance with the Board’s recommendations. Brokerage firms do not have authority to vote customers’ unvoted shares, held by the firms in street name, for the election of directors. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Proposal No. 2: Ratification of Auditor Appointment. We are seeking our stockholders’ ratification, in a non-binding vote, of our appointment of Marcum LLP to serve as our independent registered public accounting firm (our “Auditor”) for the fiscal year ending December 31, 2021.2022. The ratification of the appointment of Marcum LLP as our Auditor for these periods requires the affirmative vote of the majority of the shares cast on this Proposal No. 2 (i.e., the number of “FOR” votes cast on this Proposal No. 2 must exceed the number of “AGAINST” votes cast on this Proposal No. 2 to ratify our appointment of Marcum LLP as our Auditor). Under applicable Nasdaq market rules, Nevada law and SEC regulations, we are not required to obtain the approval of our stockholders to appoint our auditors.
TABLE OF CONTENTS Brokerage firms have authority to vote customers’ unvoted shares, held by the firms in street name, on this routine proposal. If a broker does not exercise this authority, a broker non-vote will result. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the outcome of the vote. Proposal No. 3: “Say-On-Pay.” We are seeking an advisory vote by our stockholders regarding the compensation of our named executive officers, which is discloseddiscussed in greater detail in this Proxy Statement. The affirmative vote of the majority of the shares cast on this Proposal No. 3 is required to approve, on a non-binding, advisory basis, the compensation of our named executive officers (i.e., the number of “FOR” votes cast on this Proposal No. 3 must exceed the number of “AGAINST” votes cast on this Proposal No. 3 for stockholder advisory approval of the compensation of our named executive officers to be obtained). While the results of this advisory vote are non-binding, the Compensation and Human Resources Committee of the Board (the “Compensation Committee”), and the Board as a whole, values the opinions of our stockholders and will consider the outcome of the vote, along with other relevant factors, in deciding whether any actions are necessary to address the concerns raised by the vote and when making future compensation decisions for our named executive officers.Brokerage firms do not have authority to vote customers’ unvoted shares, held by the firms in street name, for this proposal. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the outcome of the vote. Proposal No. 4: Approval to Amend the Company’s Articles of the Second Amendment to the Riot Blockchain, Inc. 2019 Equity Plan. Incorporation.We are seeking stockholder approval of an amendmentto amend to our Riot Blockchain, Inc. 2019 Equity Plan, as amended (“2019 Equity Plan”)Articles of Incorporation. Amending the Articles of Incorporation will provide us the opportunity to increase the number of authorized shares of our common stock reserved for issuance under the 2019 Equity Plan by 4,400,000 shares.and preferred stock. The affirmative vote of a majority of the votes cast for this proposaltotal number of shares of our common stock outstanding and entitled to vote as of the Record Date is required to approve the Second Amendment to the Riot Blockchain, Inc. 2019 Equity PlanCompany’s Articles of Incorporation (i.e., the number of “FOR” votes cast on this Proposal No. 4 must exceed the number of “AGAINST” votes cast on this Proposal No. 4 for stockholder approval of the amendment to be obtained). Brokerage firms do not have authority to vote customers’ unvoted shares, held by the firms in street name, for this proposal. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Abstentions and broker “non-votes” will have the same effect as a vote against this proposal. Proposal No. 5: Approval of the Third Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan. We are seeking stockholder approval of an amendment to our Riot Blockchain, Inc. 2019 Equity Plan (the “2019 Equity Plan”), as amended to increase the number of shares of our common stock reserved for issuance under the 2019 Equity Plan by 10,000,000 shares. The affirmative vote of a majority of the votes cast for this proposal is required to approve the Third Amendment to the Riot Blockchain, Inc. 2019 Equity Plan (i.e., the number of “FOR” votes cast on this Proposal No. 5 must exceed the number of “AGAINST” votes cast on this Proposal No. 5 for stockholder approval of the amendment to the 2019 Equity Plan to be obtained). Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for this proposal. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Broker non-votes and abstentions will not be counted as votes cast and will have no effect on the outcome of the vote. vote . How does the Board recommend I vote on the proposals before the Annual Meeting? The Board unanimously recommends that you vote as follows:
Proposal No. 1: Election of Directors.Director. “FOR | · | “FOR” the election of Hubert Marleau as our Class I director to serve for a term expiring at the 2022 Annual Meeting of stockholders” the election of Hubert Marleau as our Class I director to serve for a term expiring at the 2025 Annual General Meeting of Stockholders (see Proposal No. 1); |
| · | “FOR” the election of Hannah Cho and Lance D’Ambrosio as our Class II directors to serve for terms expiring at the 2023 Annual Meeting of stockholders (see Proposal No. 1); |
| · | “FOR” the election of Benjamin Yi and Jason Les as our Class III directors to serve for terms expiring at the 2024 Annual Meeting of stockholders (see Proposal No. 1); |
see Proposal No. 1); Proposal No. 2: Ratification of Auditor Appointment. “FOR | · | “FOR” ratification of the engagement of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021” ratification of the engagement of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 (see Proposal No. 2); |
see Proposal No. 2); Proposal No. 3: “Say-On-Pay”. “FOR | · | “FOR” advisory approval of the compensation of our named executive officers as set forth in this Proxy Statement (see Proposal No. 3); and |
” advisory approval of the compensation of our named executive officers as set forth in this Proxy Statement (see Proposal No. 3); TABLE OF CONTENTS Proposal No. 4: Approval of the Second Amendment to the Riot Blockchain, Inc. Articles of Incorporation. “FOR” approval of the Amendment to the Riot Blockchain, Inc. Articles of Incorporation (see Proposal No. 4); and Proposal No. 5: Approval the Third Amendment to the 2019 Riot Blockchain, Inc. Equity Plan.Incentive Plan. “FOR | · | “FOR” approval of the Second” approval of the Third Amendment to the 2019 Riot Blockchain, Inc. 2019 Equity Incentive Plan as amended (see Proposal No. 4). |
see Proposal No. 5). If any other matter is presented, the proxy card provides that your shares will be voted by the proxy holder listed on the proxy card in accordance with his or her best judgment. At the time this Proxy Statement was printed, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this Proxy Statement.
A quorum is the minimum number of shares that must be represented in person or by proxy for us to conductpresent at the Annual Meeting.Meeting to properly hold an annual meeting and conduct business under our Bylaws and Nevada law. The attendance, in personvirtually or by proxy, of holders of thirty-three and one third percent (33.333%) of the total shares outstanding as of the Record Date will constitute a quorum for doing business at the Annual Meeting. Therefore, based on 95,951,269135,347,900 shares outstanding as of September 9, 2021,May 31, 2022, the presence of 31,983,75645,115,516 shares, whether represented by their holder in personvirtually or by proxy, will constitute a quorum to holdfor purposes of the Annual Meeting. If you grant your proxy and do not revoke it prior to the Annual Meeting, your shares will be considered present at the Annual Meeting and be counted toward the quorum. Proxies marked “Withhold” or “Abstain” and “broker non-votes”broker non-votes will be treated as shares that are present for purposes of determining whether a quorum is present.has been met. What happens if a quorum is not reached? If the shares present in personvirtually or represented by proxy at the Annual Meeting are not sufficient to constitute a quorum, the stockholders, by a vote of the holders of a majority of votes present in personvirtually or represented by proxy (which may be voted by the proxy holders), may, without further notice to any stockholder (unless a new Record Date is set), adjourn the Annual Meeting to a different time and place to permit further solicitations of proxies sufficient to constitute a quorum.
Householding of Annual Disclosure Documents .The SEC has adopted a rule concerning the delivery of annual disclosure documents to households with more than one stockholder. The rule allows uspermits the Company or brokers holding ourCompany shares on your behalf to send a single set of our Annual Report and Proxy Statement to any household at which two or more of our stockholders reside, if either we or the brokers believe that the stockholders areappear to be members of the same family. Each stockholder will continue to receive a separate proxy card or voting instruction card. This practice,procedure is referred to as “householding,”“householding” and benefits both stockholders and the Company. ItHouseholding reduces the volume of duplicate information received by youstockholders and helps to reduce our expenses. TheThis rule applies to our Annual Reports, Proxy Statements and any information statements. Once stockholders receive notice from their brokers or from us that communications to their addresses will be “householded”, the practice will continue until stockholders are notified otherwise notified or until they revoke their consent to the practice. Each If at any time a stockholder will continue to receive a separate proxy card or voting instruction card.Those stockholders who do not wishno longer wishes to participate in “householding”householding and would likeprefer to receive their ownseparate sets of our annual disclosure documents in future yearsor Proxy Statement, they may revoke their consent for future mailings at any time by contacting our proxy advisors and virtual webcast hosts for the Annual Meeting, Broadridge Financial Solutions, Inc. via:
| • | · | Telephone at: 1-866-540-7095; or |
| · | Mail to: Broadridge Householding Department, c/o Broadridge, 51 Mercedes way, Edgewood, NY 11717. |
Mail to: Broadridge Householding Department, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Similarly, if an address is shared with another stockholder and, together, both of the stockholders would like to receive only a single set of our annual disclosure documents, the stockholders should follow the instructions above.
Who is paying for this proxy solicitation?solicitation? The Company will bear the cost of the solicitation of proxies by the Company;proxies; however, we will not pay our directors, officers and employees any additional compensation for soliciting proxies in person, by telephone or by other means. We may reimburse brokerage firms, banks and other agents for the cost ofreasonable out-of-pocket expenses for forwarding proxy TABLE OF CONTENTS materials to beneficial owners. We have engaged Alliance Advisors, LLC, a proxy solicitation firm whose toll-free number is 1-866-620-9211, to assist us in soliciting proxies in connection with the Annual Meeting for an engagement fee of approximately $8,000, plus reimbursement of reasonable out-of-pocket expenses. Other proxy solicitation expenses that we will pay include those for preparing, mailing, returning, and tabulating the proxies. Where can I find the voting results of the Annual Meeting?
We expect to announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Current Report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the Annual Meeting, we will file a Current Report on Form 8-K to publish preliminary results and will provide the final results in an amendment to the Current Report on Form 8-K as soon as they become available. When are stockholder proposals due for next year’s annual meeting?general meeting? All stockholder proposals, including stockholder proposals for candidates for nomination for election to the Board, should be submitted in accordance with applicable SEC rules and regulations, Nevada law, and the Company’s procedures for stockholder proposals, as described herein and under the heading “ Communications with the Board” on page 1816 of this Proxy Statement below. Stockholder proposals should be submitted to our Corporate Secretary by mail to the following address: Riot Blockchain, Inc.
3855 Ambrosia StreetRiot Blockchain, Inc. | 202 6th Street, | Suite 401 | Castle Rock, CO 80104 | Attention: Corporate Secretary. |
Suite 301
Castle Rock, CO 80109
Attention: Corporate Secretary. Stockholder proposals intended to be presented at, and included in the definitive proxy statement for, the 20222023 Annual General Meeting of stockholdersStockholders (the “2022“2023 Annual Meeting”) must be delivered to our Corporate Secretary on or before the close of business on May 24, 2022,[•], 2023, to be considered timely pursuant to SEC Rule 14a-8 and our Bylaws. Stockholder proposals intended to be presented at the 20222023 Annual Meeting outside of the SEC Rule 14a-8 process must be delivered to our Corporate Secretary at the above address no sooner than July 15, 2022,[•], 2023, and no later than August 15, 2022,[•], 2023, to be considered timely. If the date of our 20222023 Annual Meeting has been changed by more than thirty (30) days before or more than sixty (60) days after the first anniversary of this year’s Annual Meeting, stockholders must comply with the following procedure to submit their proposals to be considered at the 20222023 Annual Meeting. If public announcement of the 20222023 Annual Meeting occurs one hundred (100) days or more prior to the scheduled date of the 20222023 Annual Meeting, then stockholder proposals must be delivered to our Corporate Secretary at the foregoing address no more than one hundred twenty (120) days before and no less than ninety (90) days before the date of the 20222023 Annual Meeting to be considered at the meeting. However, if public announcement of the 20222023 Annual Meeting occurs less than hundred (100) days prior to the scheduled date of the 20222023 Annual Meeting, then stockholder proposals can be delivered up to ten (10) days after public announcement of the 20222023 Annual Meeting is first made. Stockholders may nominate candidates for the Board by the same deadlines as stockholder proposals for business to come before the 20222023 Annual Meeting. Each notice of business or nomination must set forth the information required by our Bylaws. Any such proposals, including stockholder proposals for candidates for nomination for election to the Board, must be submitted in accordance with applicable SEC rules and regulations, and follow the Company’s procedures in its Bylaws. In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by SEC Rule 14a-19 no later than May 28, 2023. Submitting a notice does not ensure that the proposal will be raised at the 20222023 Annual Meeting. We will not permit stockholder proposals or nominations that do not comply with the foregoing notice requirement to be brought before the 20222023 Annual Meeting. TABLE OF CONTENTS
Our business operates under the direction of the Board, which, pursuant to our Bylaws, is divided into three approximately equal in size classes of directors as follows: Class I, Class II and Class III. The Governance and Nominating Committee and the Board have unanimously fixed the size of the Board at five directors, with one director designated as a Class I director, two directors designated as Class II directors, and two directors designated as Class III directors. Each of the fiveThe Class I director seatsseat on the Board is up for election this year. The Governance and Nominating Committee and the Board have unanimously nominated and hereby recommend to the stockholders for their approval at the Annual Meeting the following slate of director nomineesnominee for election to the Board: Class I: | | | Hubert Marleau (director since 2020) is standing for election for a term expiring at the 20222025 Annual General Meeting. | | | Class II: | Hannah Cho (director since 2021) and Lance D’Ambrosio (director since 2021) are each standing for election for terms expiring at the 2023 Annual Meeting of Stockholders. | | | Class III: | Benjamin Yi (director since 2018) and Jason Les (director since 2017) are standing for election for terms expiring at the 2024 Annual Meeting of Stockholders |
Upon the expiration of the initial term of office for each class of directors, their successors shall be elected to serve for terms of office expiring at the third annual general meeting of stockholders following their election, with one class of directors standing for election at each successive annual general meeting of stockholders. Information relating to eachthe nominee for election as director and for each continuing director, including period of service as a director of the Company, principal occupation and other biographical material, is shown later in this Proxy Statement.All five (5) nominees haveMr. Marleau has consented to stand for election to the class set forth next to their name;as a Class I director; and we have no reason to believe that any of the nomineeshe is unable or will decline to serve as a director if elected. Although the Company knows of no reason why any nomineeMr. Marleau could not serve as a director, if any nominee shall behe is unable to serve, the accompanying proxy will be voted for a substitute nominee. EachThe director nominee, if elected, will serve until the expiration of theirhis term and until a successor is named and qualified, or until his or her earlier resignation, death or removal.
As provided by our Bylaws, should a director die, resign or otherwise be removed from office prior to the expiration of his or her term of office, the remaining directors may appoint an interim director to fill the resulting vacancy on the Board until a successor is duly qualified and elected by the stockholders following the expiration of the term of office.
Pursuant to our Bylaws, the nominees for director are elected byCompany uses a plurality of votes cast “FOR”standard for the nominees for director. You may vote “FOR” all or anyelection of directors. Plurality of the nominees, or you may “WITHHOLD” your vote from all or anyvotes cast means that the number of votes cast “FOR” each nominee for director must exceed the nominees.number of votes cast “AGAINST” that director nominee. Votes that are withheldmarked “WITHHOLD” will not be included in the vote tally for the election of directors and thus will have no effect on the outcome of the vote on this proposal. If you submit your proxy card without directing your proxy how to vote your shares, your shares will be voted in accordance with the Board’s recommendations. Brokerage firms do not have authority to vote customers’ unvoted shares, held by the firms in street name, for the election of directors. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. AbstentionsWithholds and broker non-votes will have no effect on the results of this vote. BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 1: THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE NOMINEESNOMINEE NAMED ABOVE AS DIRECTORS,DIRECTOR, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
TABLE OF CONTENTS INFORMATION REGARDING DIRECTORS The information set forth in the following table is current as of the date of this Proxy Statement, of the individuals who currently serve as directors on the Board. | Name | | Age | | Director Since | | | Position(s) | | Committee Assignments | | | Benjamin Yi | | 39 | | 2018 | | | Executive Chairperson | | None | | | Jason Les | | 35 | | 2017 | | | Chief Executive Officer and Executive Director | | None | | | Hubert Marleau | | 77 | | 2020 | | | Lead Independent Director | | Audit Compensation and Human Resources Governance and Nominating* | | | Hannah Cho | | 43 | | 2021 | | | Director | | Audit Compensation and Human Resources* Governance and Nominating | | | Lance D’Ambrosio | | 64 | | 2021 | | | Director | | Audit* Compensation and Human Resources Governance and Nominating | |
*Indicates Committee Chairperson.
Nominees for Election as
Benjamin Yi | | | 40 | | | 2018 | | | | | | | | | | | | | Jason Les | | | 36 | | | 2017 | | Hubert Marleau | | | 78 | | | 2020 | | | ✔ | | | | | | ✔ | | | | Hannah Cho | | | 44 | | | 2021 | | | ✔ | | | ✔ | | | | | | ✔ | Lance D’Ambrosio | | | 65 | | | 2021 | | | ✔ | | | | | | ✔ | | | ✔ |
| | | Committee Chair | | | | Audit Committee financial expert |
Class III Directors (Terms Expiring in 2024)
Benjamin Yi,, age 39, currently serves as the Executive Chairperson of our Board. Mr. Yi40, has served as a director on the Company’s Board since 2018 and as its Chair since November 2020. Effective May 24, 2021, Mr. Yi was appointed Executive Chairman of the Board, a role in which he serves as both Board chair and as an executive officer of the Company. The Board determined to appoint Mr. Yi as Executive Chairman to better allow the Company to leverage his considerable knowledge of the Company, since October 23, 2018, initiallyleadership abilities, and corporate governance, executive and capital markets experience to help it carry out the strategic initiatives set by the Board. Mr. Yi has previously served as a member of each of the Board’s three standing committees, however, as of May 24, 2021, upon his appointment as the Company’s Executive Chairman, Mr. Yi resigned from his positions on the Audit Committee (including from his position as its chair), the Compensation and Human Resources Committee, and the Governance and Nominating Committee. As Executive Chairman, Mr. Yi continues to be a director on the Board, where he plays an integral role in establishing the Board’s strategic vision for the Company and, except when the Company’s bylaws, the Nasdaq Rules, the rules and regulations of the SEC, or Nevada law require him to abstain from the meeting, serve as Board chair. In addition to his significant experience as a member of our Board and as one of our executive officers, Mr. Yi brings significant corporate governance experience to Riot’s Board, having served as an independent director and audit committee chair of the Board.several private and public companies. Prior to joining Riot’s Board in 2018, Mr. Yi was elected Chairpersonserved as an Independent Director and Chair of the Corporate Governance and Remuneration Committee of PetroMaroc Corporation, plc (formerly TSX-V: PMA), a Toronto-based energy company, from December 2013 to December 2016; as a member of the Board of Managers and Audit Committee of Android Industries, LLC, a privately held Michigan-based assembler of complex modules for the automotive industry, from January 2014 to September 2016; and as an Independent Director, member, and occasional Chair of the Audit Committee of Woulfe Mining Corp. (formerly CSE: WUF), a Vancouver-based mining company, from October 2013 to its acquisition in November 2020 and nominated Executive Chairperson in May 2021.From 2017 to 2021, September 2015.
Mr. Yi ledalso brings over fifteen years of unique capital markets experience to the Company, and a particular expertise in fintech, specialty finance, and investing throughout a company’s capital structure. Prior to his appointment as our Executive Chairman, Mr. Yi headed the capital markets and corporate development efforts at IOU Financial Inc (TSX Venture Exchange:Inc. (TSX-V: IOU; OTC:OCTMKTS: IOUFF), a tech-enabledMontreal-based fintech-enabled lender to small businesses and an investee company of Neuberger Berman. From 2010 to 2016,across North America. Previously, Mr. Yi worked directly under Ned Goodman, a renowned Canadian financier, investor, and founder of Dundee Corporation (TSE: DC.A; OCTMKTS: DDEJF), a Toronto-based conglomerate.conglomerated investment and corporate development company focused on the mining sector. At Dundee Corporation, he worked in a corporate development and investment capacity, investing throughout the capital structure of companies involved in the natural resource extraction, energy technology, real estate, and automotive sectors. Prior to Dundee Corporation, Mr. Yi was also a securities analyst at the predecessor to 1832 Asset Management L.P., where he covered energy and special situations investments. investments as part of a team managing one of North America’s largest natural resources-focused investment funds. Mr. Yi becameis a CFA charter holder, in 2008 and he holds a Master of Finance degree from the University of Toronto Rotman School of Management and a Bachelor of Commerce degree from Trinity College in the University of Toronto..Toronto.
TABLE OF CONTENTS We believe Mr. Yi brings significant experience in corporate strategy, corporate development, and governanceis qualified to the Company. In addition to having servedserve as a director on Riot’s Board based on his knowledge of several publicthe Company, his service as a member of its Board of Directors since 2018, his past service as chair of the Audit Committee and private companies,the Compensation and Human Resources Committee, and because he also brings over seventeenfifteen years of unique capitaldedicated financial markets experience to the Company’s management team, with a particularCompany. Mr. Yi leverages his expertise in portfolio management, fintech-enabled businesses, specialty finance,capital markets and special situations investing throughcorporate development as a company's capital structure.We believe that Mr. Yi possesses specific attributes that qualify himBoard member to servehelp shape Board discussions and strategic policymaking decisions as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. Further, as a member of the Board, includingCompany’s executive team, Mr. Yi applies his executive, corporate governance and finance experience.
expertise to assist the Company in carrying out the Board’s strategic vision. Jason Les,, age 35, the Company’s Chief Executive Officer,36, has served as a director on the Company’s Board since November 2017 and, effective February 8, 2021, was appointed to serve as the Company’s Chief Executive Officer. Prior to his appointment as Chief Executive Officer, Mr. Les had served as a member of each of the Company since November 2017. Board’s three standing committees, including as chair of the Compensation and Human Resources Committee. Mr. Les is the driving force behind the Company’s mission to become one of the most relevant and significant companies supporting the Bitcoin network. He has been deeply involved with Bitcoin since 2013, with significant experience in cryptocurrency mining, and as an engineer studying protocol development, and contributing to open-source projects. He was also a founding partner of Binary Digital, a software-development company where he led the engineering team and coordinated project development for artificial intelligence, reverse engineering, and inter-software compatibility projects. Additionally, Mr. Les’his background includes over a decade of unique experience as a former professional heads-up poker player, during which he has successfully competed in high-stakes games online, in addition to the most prestigious, high-stakes tournaments in the world. In 2015 and 2017, he was selected as a human benchmark for testing the world’s best poker artificial intelligence in what was dubbed “Man vs Machine” at Carnegie Mellon University. Mr. Les holds a Bachelor of Science in Information & Computer Science from U.C. Irvine.
We believe that Mr. Les possesses specific attributes that qualify himis qualified to serve as a memberdirector on Riot’s Board based on his knowledge of the Board, including the perspective and experience he bringsCompany, his service as ourits Chief Executive Officer and, his experiencebefore that, as a director on the Board, and because he has been an active participant in the cryptocurrency industry since 2013. Mr. Les brings technical expertise regarding Bitcoin mining industry.Nominees for Electionand protocol development, as well as his astute understanding of the overall Bitcoin industry and his commitment to educating the public about Bitcoin and Bitcoin mining, to Board discussions and strategic policymaking decisions that help the Board establish, oversee and improve Company policies designed to drive growth of the Company and protect stockholder interests.
Class II Directors (Terms Expiring in 2023)
Hannah Cho,, age 43, was elected and appointed to the Board as an independent director effective and44, has served as a director on the Company’s Board, including as a member of each of its three standing committees, since February 2021. Ms. Cho currently serves as the Chairpersonchair of the Board’s Compensation and Human Resources Committee. The Board has affirmatively determined that Ms. Cho meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation and Human Resources Committee. Ms. Cho is a veteran marketing and communications professional who has spent herwith a career of over fifteen years in the enterprise technology industry. She brings significant executive leadership experience in the enterprise technology brand marketing, product and corporate communications fields, which she gained at leading technology companies including Anaplan, CA Technologies, Intel Corporation, and Cisco Systems. She has leveraged her experience to assist global, multinational organizations across all stages of the business life-cycle, from growth and expansion, to rebranding efforts, to M&A, IPO and divestiture. Currently, Ms. Cho is currently Vice President, Marketing Communications at BMC Software, a portfolio company of KKR which offers software and services to support cloud computing, IT service management, automation, IT operations, and the mainframe for digital transformation. Ms. Cho brings significant executive leadership experience in marketing and communications gained at leading technology companies including Anaplan, CA Technologies, Intel Corporation, and Cisco Systems. In additionPrior to her corporate experience,BMC Software, she was also previously Senior Vice President, Technology Communications at Edelman.Edelman, a Chicago-based global public relations and marketing consultancy firm. She holds a BA Honours in Criminology from Carleton University. We believe that Ms. Cho possesses specific attributes that qualify heris qualified to serve as a member of thedirector on Riot’s Board includingbased on her extensive experience in the enterprise technology industry, and because she is able to bring her significant knowledge and expertise in additionthe marketing and communications aspects of the enterprise technology space to bear to help the Board establish policies and strategies to assist the Company in navigating the public discourse regarding the Bitcoin mining industry. TABLE OF CONTENTS Ms. Cho leverages her executive leadership experience, as well as her marketing and corporate governance experience.communications expertise in the enterprise technology space during Board discussions and strategic policymaking decisions to assist the Board as it seeks to continue to establish, oversee and improve Company policies designed to drive the growth of the Company and protect stockholder interests. Lance D’Ambrosio,, 64, 65, has served as a director on the Company’s Board, including as a member of each of its three standing committees, since May 2021. Mr. D’Ambrosio currently serves as the Chairpersonchair of the Board’s Audit Committee. The Board has affirmatively determined that Mr. D’Ambrosio meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation and Human Resources Committee. Further, based on his experience and financial expertise described below, the Board has determined that Mr. D’Ambrosio qualifies as an “audit committee financial expert” (as that term is defined in Item 407(d) of Regulation S-K) and has designated him as one of two audit committee financial experts presently serving on the Audit Committee. Mr. D’Ambrosio has over thirty (30) years’ experience as a corporate officer and director, with experienceincluding in corporate governance, capital raising, financial analysis, mergers and acquisitions, and complex international structuring. Mr. D’Ambrosio currently serves as the Managing Partner of 4 D Investments, a company which focuses on technology and real estate investments. Prior to 4 D Investments, Mr. D’Ambrosio served as the chairperson onchief executive officer and chairman of the board of directors and as and chief executive officer of Crystal Peak Minerals, a Canadian public company focused on precious metals mining, from 2010 to 2018. As a corporate executive, Mr. D’Ambrosio has guided both publicfounded and privategrown numerous companies through mergersspanning several industries including the telecommunications, materials, and acquisitions,automotive sectors. Over the course of his career, he has led capital raising campaigns,efforts totaling hundreds of millions of dollars, executed on over thirty corporate acquisitions, successfully taken a number of companies public on both U.S. and other related transactions. international exchanges, and successfully sold several businesses to larger market participants, including Sprint Telecommunications and Comsat International, a subsidiary of Lockheed Martin. He also has significant experience as an entrepreneur, having founded several companies spanning a broad spectrum of industries, including the telecommunications, materials, and automotive sectors. Mr. D’Ambrosio has been recognized as a recipient of the Ernst & Young and Merrill Lynch Entrepreneur of the Year Award in the category of e-Software & Services, and he graduatedholds Bachelor of Science in Marketing and Bachelor of Science in Management degrees from the University of Utah, where he graduated in 1979 as a member of the Dean’s Honor List with a Bachelor of Science in Marketing and in Management.List. We believe that Mr. D’Ambrosio possesses specific attributes that qualify him is qualified to serve as a member of thedirector on Riot’s Board includingbased on his extensive experience as a corporate executive, entrepreneur, and board member. He is able to leverage his substantial corporate governance and finance experience.experience during Board discussions and strategic policymaking decisions to help the Board establish, oversee and improve Company policies designed to drive growth of the Company and protect stockholder interests. Nominee for Election as Class I Director (Term Expiring in 2022) 2025) Hubert Marleau,, age 77,78, has served on our Board since November 2020 and currently serves as the Board’s Lead Independent Director on our Board. Mr. Marleau has served as a director since November 2020. Mr. Marleau currently serves as the Chairpersonand Chair of the Board’s Governance and Nominating Committee. As the Board’s Lead Independent Director, Mr. Marleau chairs those Board meetings from which our Executive Chairman, Mr. Benjamin Yi, is required to abstain from the meeting under the Company’s bylaws, the applicable rules and Governanceregulations of the Nasdaq Rules, the rules and regulations of the SEC, or Nevada law, as applicable. The Board has affirmatively determined that Mr. Marleau meets the director independence standards of the Nasdaq Rules and the SEC, including the enhanced standards required for members of the Audit Committee and the Compensation and Human Resources Committee. Further, based on his experience and financial expertise described below, the Board has determined that Mr. Marleau qualifies as an “audit committee financial expert” (as that term is defined in Item 407(d) of Regulation S-K) and has designated him as one of two audit committee financial experts presently serving on the Audit Committee. Mr. Marleau is a veteran capital markets professional, corporate director, and Chair of the Marleau Lecture Series on Economic and Monetary Policy at the University of Ottawa. Mr. Marleau’s broad areas of expertise include macroeconomic policy & analysis, corporate governance, financial analysis, and investment banking, having served on the board of directors for more than fifty U.S. and Canadian publicly traded companies throughout his career. TABLE OF CONTENTS Presently, Mr. Marleau serves as a member of the board of directors of Niocan, Inc. (TSX-V: NIO; OCTMKTS: NIOCF), a Montreal, Canada-based metals and minerals mining company, and of Premier Health of America Inc. (TSX-V: PHA), a Blainville, Québec-based specialized healthcare staffing and outsourcing services company, where he serves as president of its audit committee. Mr. Marleau also has extensive capital markets experience, having raised funds privately and publicly for hundreds of emerging and mature companies, structured numerous mergers and acquisitions, and acted as the driving force behind numerous transactions throughout his career. Currently, he serves as Chief Economist at Palos Management, a Montreal, Canada-based boutique investment management firm headquartered in Montreal, Canada, and has served on the board of directors of the following publicly traded companies: GobiMin Inc. (TSX Venture Exchange: GMN; OTC: GMNFF), a precious metals mining company headquartered in Montreal, Canada; Niocan Inc. (TSX Venture Exchange: NIO.V; OTC: NIOCF), a minerals exploration and development company based in Quebec, Canada; and Dundee Sustainable Technologies Inc. (Canadian Securities Exchange: DST; OTC: DNDDF), a precious metals mining company based in Montreal, Canada developing advanced metallurgical processes for use in sustainable mining development projects. Additionally, Mr. Marleau has served on the board of directors of Premier Health of America, Inc., listed on the TSX Venture Exchange, since March 2, 2020.he co-founded. In addition to a career in the capital markets that has spanned over five decades, Mr. Marleau has previously served as a Governor of the Toronto, Montreal and Vancouver stock exchanges, and as a Director of the Listing Committee for the Toronto Stock Exchange, and as Director of the Investment Dealers Association of Canada (now known as IIROC). Mr. Marleau’s broad areas of expertise include macroeconomic policy & analysis, corporate governance, financial analysis, and investment banking. In addition to having served as a board member of approximately fifty publicly-held companies, he has raised funds privately and publicly for hundreds of emerging and mature companies, structured numerous mergers and acquisitions, and acted as the driving force behind numerous transactions. Mr. Marleau graduated from the University of Ottawa in 1967 withholds an Honours Bachelor of Social Sciences in Economics.
Economics from the University of Ottawa. We believe that Mr. Marleau possesses specific attributes that qualify himis qualified to serve as a member of thedirector on Riot’s Board includingbased on his executive,extensive corporate governance and finance experience.PROPOSAL NO. 2
RATIFICATION OF AUDITOR APPOINTMENT
We are asking our stockholderspublic company board experience, and because he brings over five decades of dedicated financial markets and economics experience to ratify the appointmentCompany. He brings his extensive experience and engagement by our Audit Committee of Marcum LLP,expertise to serve as our independent registered public accounting firmBoard discussions and policymaking decisions, helping to assist the Board shape its strategic vision for the fiscal year ending December 31, 2021. Although our Bylaws do not require that our stockholders approve the appointment of our independent registered public accounting firm, the Audit Committee is submitting the selection of Marcum LLP to our stockholders for ratification as a matter of good corporate practice. If our stockholders vote against the ratification of Marcum LLP, the Audit Committee will consider this in its selection of auditors for the following year. Even if our stockholders ratify the appointment, the Audit Committee may choose to appoint a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the interest of our Company and our stockholders.
The Audit Committee has retained Marcum LLP as the Company’s independent registered public accounting firm, to perform the audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2021, to be included on the Company’s annual report on Form 10-K for the same period. The Audit Committee previously retained Marcum LLP to serve as the Company’s independent public accounting firm and to perform such audit services for the fiscal years ended December 31, 2018, 2019 and 2020. A representative of Marcum LLP is expected to be present virtually at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions. During our two most recent fiscal years through December 31, 2020, and the subsequent interim period through August 31, 2021, neither us nor anyone on our behalf consulted Marcum LLP regarding either (1) the application of accounting principles to a specified transaction regarding us, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter regarding us that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
Audit Fees
The Company’s Audit Committee currently has a policy in place that requires its review and pre-approval of all audit and permissible non-audit services provided by its independent auditors. These services requiring pre-approval by the Audit Committee may include audit services, audit related services, tax services and other services. All of the services performed by the independent registered public accounting firm were approved by the Company’s Audit Committee and prior to performance. The Audit Committee has determined that the payments made to its independent accountants for these services are compatible with maintaining such auditors’ independence.
Aggregate fees billed or expected to be billed for professional services for the years ended December 31, 2020 and 2019 in the following categories and amounts were:
| | | 2020 | | 2019 | | | | | | | | Audit Fees (1) | | $ | 413,545 | | | $ | 429,000 | | | | | | | | | | | | | Audit-Related Fees | | | — | | | | — | | | | | | | | | | | | | Tax Fees (2) | | | 47,250 | | | | 2,000 | | | | | | | | | | | | | All Other Fees | | | — | | | | — | | | | | | | | | | | | | Total Fees | | $ | 460,795 | | | $ | 431,000 | |
(1) | Audit fees relate to the financial statement audits, the quarterly reviews and related matters. Audit fees include services rendered by Marcum LLP, our independent registered accounting firm, for the 2020 and 2019 audits totaling $278,100 and $296,000, respectively. Fees also include services rendered by Marcum LLP for their reviews of the interim condensed consolidated financial statements included in the Company’s Form 10-Qs during the first three quarters of 2020 and 2019 totaling $70,040 and $72,000. Audit fees include services, including services related to the review of our registration statements by Marcum LLP, in 2020 and 2019, totaling $65,405 and $42,000, respectively and by MNP LLP and EisnerAmper LLP (the Company’s prior auditors) for 2019 totaling $7,000 and $12,000, respectively. | | | (2) | Tax Fees include fees for services rendered for tax compliance and related matters. There were no Tax Fees incurred with or services provided by our auditors, Marcum LLP in 2020 or 2019. | | | | | | | | |
Our principal accountant (through its full-time employees) performed all work regarding the audit of our financial statements for the most recently completed fiscal year.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
All of the services performed in the years ended December 31, 2020 and December 31, 2019 were pre-approved by the Audit Committee. It is the Audit Committee’s policy to pre-approve all audit and permissible non-audit services to be provided to us by the independent registered public accounting firm. Our Audit Committee pre-approves these services by category and service. In addition, the Audit Committee has considered whether the provision of the non-audit services above is compatible with maintaining the independent registered public accounting firm’s independents.
No Appraisal Rights
Under the Nevada Revised Statutes, our stockholders are not entitled to appraisal rights with respect to our proposed ratification of the appointment of Marcum LLP as our independent registered public accounting firm, and we will not independently provide our stockholders with any such rights.
Vote Required
The affirmative vote of a majority of the votes cast for this proposal is required to ratify the appointment of the Company’s independent registered public accounting firm. Abstentions will be counted towards the tabulation of votes cast on this proposal but will have no effect on the outcome of the vote on this proposal. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote.
BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 2:
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL NO. 3
“SAY-ON-PAY”
APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Pursuant to Schedule 14A of the Exchange Act, we are asking our stockholders to approve, on an advisory basis, the compensation of our “named executed officers” as disclosed in this Proxy Statement under the heading “Executive Compensation” beginning on page 25 below. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to weigh in on our named executive officers’ compensation as a whole. The Company has disclosed the compensation of the named executive officers pursuant to rules adopted by the SEC.
We believe that our compensation policies for the named executive officers are designed to attract, motivate and retain talented executive officers and are aligned with the long-term interests of the Company’s stockholders. This advisory stockholders vote gives you, as a stockholder, the opportunity, on a purely advisory basis, to approve or not approve the compensation of the named executive officers that is disclosed in this Proxy Statement by voting “FOR” or “AGAINST” the following resolution (or by choosing to “ABSTAIN” with respect to the resolution):
RESOLVED, that the stockholders of the Company approve all of the compensation of the Company’s executive officers who are named in the Summary Compensation Table of the Company’s 2021 Proxy Statement, as such compensation is disclosed in the Company’s 2021 Proxy Statement pursuant to Item 402 of Regulation S-K, which disclosure includes the Proxy Statement’s Summary Compensation Table and other executive compensation tables and related narrative disclosures.
Because your vote is advisory, it will not be binding on either the Board of Directors or the Company. However, the Company’s Compensation and Human Resources Committee will take into account the outcome of the stockholder vote on this proposal at the Annual Meeting when considering future executive compensation arrangements. Your non-binding advisory votes described in this Proposal No. 3 will not be construed: (1) as overruling any decision by the Board of Directors, any Board Committee or the Company relating to the compensation of the named executive officers, or (2) as creating or changing any fiduciary duties or other duties on the part of the Board of Directors, any Board Committee or the Company.
Vote Required
The advisory vote to approve the compensation of our executive officers will be approved if the majority of the votes cast on this proposal are cast “FOR” the proposal. Abstentions and broker non-votes will be counted as votes present for quorum purposes but will not be counted as either votes cast for or against this proposal. While the results of this advisory vote are non-binding, the Compensation and Human Resources Committee of the Board and the Board values the opinions of our stockholders and will consider the outcome of the vote, along with other relevant factors, in deciding whether any actions are necessary to address the concerns raised by the vote and when making future compensation decisions for executive officers.
BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 3:
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS STATED IN THE ABOVE NON-BINDING RESOLUTION, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL NO. 4
APPROVAL OF THE SECOND AMENDMENT
TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN
Introduction
We are proposing that our stockholders approve the Second Amendment to the Riot Blockchain, Inc. 2019 Equity Plan, as amended (the “Second Amendment to the 2019 Equity Plan”) to increase the number of shares of our common stock, no par value per share, reserved for issuance under the 2019 Equity Plan by 4,400,000 shares. If our stockholders approve the Second Amendment to the 2019 Equity Plan, it will become effective on the date of such stockholder approval. If our stockholders do not approve the Second Amendment to the 2019 Equity Plan, we will only grant awards under the 2019 Equity Plan until the shares available for issuance thereunder are exhausted.
On the recommendation of our Compensation and Human Resources Committee, our Board unanimously approved the Second Amendment to the 2019 Equity Plan on September 14, 2021, subject to its approval by our stockholders at the Annual Meeting. The Second Amendment to the 2019 Equity Plan is intended to supplement the 2019 Equity Plan by increasing the number of shares available for issuance under the 2019 Equity Plan to our non-employee independent directors, officers, employees, personnel, and other eligible plan participants. A summary of the Second Amendment to the 2019 Equity Plan appears below under the heading “Summary Description of the Second Amendment to the 2019 Equity Plan” and a copy of the Second Amendment to the 2019 Equity Plan is attached as Appendix A to this Proxy Statement.
As authorized by the Board and approved by our stockholders at the 2019 Annual Meeting, we have registered the issuance of the 3,600,000 shares of our common stock authorized by the 2019 Equity Plan by our Registration Statement on Form S-8, filed with the SEC (SEC File Number 333-235355). At the 2020 Annual Meeting, our stockholders authorized the reservation of an additional 3,500,000 shares for issuance under the 2019 Equity Plan pursuant to the First Amendment to the Riot Blockchain, Inc. 2019 Equity Plan (the “First Amendment to the 2019 Equity Plan”).
We believe the Second Amendment to the 2019 Equity Plan, if approved by our stockholders, will provide us with a sufficient number of shares available for issuance under the 2019 Equity Planseeks to continue to provide a range of equity incentive toolsestablish, oversee and sufficient flexibilityimprove Company policies designed to permit us to make effective use of the share-based awards our stockholders authorize for incentive purposes for the next three years.
Rationale for Amending the 2019 Equity Plan as Proposed
We are asking stockholders to approve the Second Amendment to the 2019 Equity Plan to increase the number of shares available for issuance under the 2019 Equity Plan by 4,400,000 additional shares because we will be unable to make equity grants to our key employees and non-employee directors once the share reserve is exhausted under the 2019 Equity Plan for the reasons stated below. We believe that a comprehensive equity incentive compensation program serves as a necessary and significant tool to attract and retain executive officers, employees and non-employee directors in our highly competitive industry. Further, we believe equity awards, including performance equity awards, provide a strong incentive to our directors, officers, and employees to contribute materially todrive the growth of the Company by better aligning their interests with thoseand protect stockholder interests.
There are no familial relationships between any of the director nominees or our executive officers, nor are any of our stockholders.Following the adoptiondirectors, director nominees or executive officers party to any legal proceedings adverse to us.
The matrix below summarizes certain of the 2019 Equity Plan, as amended, we have made regular awards of restricted stock units (“RSUs”) tokey experiences, qualifications, skills, and attributes that our directors, officers, and employees pursuantdirector nominees bring to the 2019 Equity Plan. In 2021, we have been engaged inBoard to enable effective oversight. This matrix is intended to provide a significant period of growth as an organization, culminating in our May 2021 acquisitionsummary of our wholly owned subsidiary, Whinstone US, Inc.,director nominees’ qualifications and its more substantial employee base. In connection with this growth, we have made additional awardsis not a complete list of RSUseach director nominee’s strengths or contributions to our employees, officers,the Board. Additional details on each director nominee’s experiences, qualifications, skills, and directors, including thoseattributes are set forth in their biographies above. Industry and Technology | | | X | | | X | | | | | | X | | | | Executive Leadership | | | X | | | X | | | X | | | X | | | X | Growth and Emerging Technologies | | | X | | | X | | | | | | X | | | | Global Business | | | X | | | | | | X | | | X | | | X | Financial and Accounting | | | X | | | | | | X | | | X | | | X | Service, Operations and Manufacturing | | | | | | | | | | | | | | | X | Strategy and Innovation | | | X | | | X | | | X | | | X | | | X | Communication and Marketing | | | | | | | | | | | | X | | | | Cryptocurrency | | | X | | | X | | | | | | | | | | Corporate Governance | | | X | | | X | | | X | | | | | | X | | | | | | | | | | | | | | | | | Demographics
| | | | | | | | | | | | | | | | Age | | | 40 | | | 36 | | | 78 | | | 44 | | | 65 | Gender Identity | | | M | | | M | | | M | | | F | | | M | Asian | | | X | | | | | | | | | X | | | | White | | | | | | X | | | X | | | | | | X |
TABLE OF CONTENTS Corporate Governance Guidelines, Code of Whinstone under the 2019 Equity Plan, further drawing down the number of shares reserved for issuance under the 2019 Equity Plan. Additionally, the CompensationEthics and Human ResourcesBusiness Conduct, and Committee in consultationCharters Our Corporate Governance Guidelines, together with our outside compensation advisors, established a Performance RSU Plan underBoard committee charters, provide the 2019 Equity Plan in Augustframework for the corporate governance of 2021 to better alignthe Company. This promotes the interests of our executive officersstockholders and employees with thosestrengthens our Board and management accountability. Below is a summary of our stockholders. In connection with the adoption of the Performance RSU Plan, the CompensationCorporate Governance Guidelines and Human ResourcesBoard Committee granted a number of Performance RSU awards under the 2019 Equity Plan which are contingent upon the Company attaining certain specified performance objectives during the three-year performance period. Please refer to the section of this Proxy Statement entitled “Equity Compensation Plan Information” on page 26 of this Proxy Statement for a more complete description of the Performance RSU Plan.Without increasing the number of shares available for issuance under the 2019 Equity Plan, once the current reserve of shares is exhausted, we will not be able to continue to offer competitive levels of equity compensation to attract and retain qualified personnel to continue supporting our growth. As a result, the Company might need to make significant changes to its compensation practices that would limit its flexibility to provide competitive compensation and thus its ability to attract, motivate and retain highly qualified personnel for positions of substantial responsibility with the Company.
The Compensation and Human Resources Committee, in consultation with the Company’s outside compensation advisors and based on an analysis of the Company’s historic equity compensation share usage, its anticipated future equity compensation needs, and its assumptions regarding market conditions and compensation, recommended an additional 4,400,000 shares be made available for issuance under the 2019 Equity Plan. We believe, based on our current rate of share issuance pursuant to the 2019 Equity Plan and our expectations regarding our future equity compensation needs, and barring any significant changes to our projections, that our current request to increase the share reserve under the 2019 Equity Plan by 4,400,000 shares should enable us to continue to make competitive grants of equity compensation. These projections are subject to change pursuant to the discretion of the Compensation and Human Resources Committee, as administrator of the 2019 Equity Plan, who may determine, based on future events and market conditions, to alter the Company’s equity compensation strategy or projections.
Summary Description of the Second Amendment to the 2019 Equity Plan
The sole aspect of the 2019 Equity Plan to be amended by the proposed Second Amendment to the 2019 Equity Plan is to increase the number of shares reserved for issuance under the 2019 Equity Plan by 4,400,000 shares. No other provisions of the 2019 Equity Plan are modified, amended, revised, or otherwise changed by this proposed Second Amendment to the 2019 Equity Plan. The specific terms of the 2019 Equity Plan, such as who is eligible to receive awards under the 2019 Equity Plan, the terms of awards, such as vesting periods, the exercise price of any options, and any expiration of these awards, as well as the tax consequences of the awards which may be made under the 2019 Equity Plan, are set forth in the 2019 Equity Plan, as approved by the Company’s stockholders on October 23, 2019 and filed with the SEC on December 5, 2019 as Exhibit 4.5 to our Registration Statement on Form S-8 (SEC File Number 333-235355).
The number of shares that will ultimately be issued from the shares reserved for issuance under the 2019 Equity Plan, as amended by the proposed Second Amendment to the 2019 Equity Plan, is subject to the discretion of the Compensation and Human Resources Committee and, therefore, cannot be determined with certainty at this time. However, the Company anticipates that the Compensation and Human Resources Committee will continue in future years to make annual cash and equity awards as described above.
This summary does not purport to be a complete description of all the terms of the Second Amendment to the 2019 Equity Plan, and is qualified in its entirety by reference to the complete text of the Second Amendment to the 2019 Equity Plan, which is attached to this Proxy Statement as Appendix A. Further, this summary does not purport to be a complete description of the 2019 Equity Plan and is qualified entirely by reference to the full text of the 2019 Equity Plan, as filed with the SEC on December 5, 2019 as Exhibit 4.5 to our Registration Statement on Form S-8 (SEC File Number 333-235355). To the extent there is a conflict between this summary and the actual terms of the 2019 Equity Plan, as amended, the actual terms of the 2019 Equity Plan, as amended, will govern.
Vote Required
The affirmative vote of a majority of the votes cast on this Proposal No. 4 will be required to approve the Second Amendment to the 2019 Equity Plan (i.e., the number of “FOR” votes must exceed the number of “AGAINST” votes for this proposal to be approved).
Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the adoption of equity incentive plans. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Broker non-votes and abstentions will not be counted as votes cast “FOR” or “AGAINST” the approval of the Second Amendment to the 2019 Equity Plan and will have no effect on the outcome of the vote.
BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 4
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE SECOND AMENDMENT TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE BY SELECTING “AGAINST” OR “ABSTAIN” ON THE PROXY.
CORPORATE GOVERNANCE
Corporate Code of Conduct
Our Code of Ethics and Business Conduct (the “Code of Ethics”) applies to our employees, directors, officers, contractors, consultants, and persons performing similar functions (“Covered Persons”). This includes our principal executive officerPrincipal Executive Officer and our principal financial officer.Principal Financial Officer. We require that they avoid conflicts of interest, comply with applicable laws, protect our assets, and conduct business in an ethical and responsible manner and in accordance with the Code of Ethics. The Code of Ethics prohibits employees from taking unfair advantage of our business partners, competitors, and employees through manipulation, concealment, misuse of confidential or privileged information, misrepresentation of material facts, or any other practice of unfair dealing or improper use of information. The Code of Ethics requires employees to comply with all applicable laws, rules, and regulations wherever in the world we conduct business. This includes applicable laws on privacy and data protection, anti-corruption and anti-bribery, and trade sanctions. Our Code of Ethics is publicly available and can be found online under the “Governance” tab on the “Investors” page of our website, www.RiotBlockchain.com. If we make substantive amendments to the Code of Ethics, or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our named executive officers, directors, financial professionals, and persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a report filed with the SEC on Form 8-K. We provide our Corporate Governance Guidelines, as well as the charters of each of our Board committees and our Code of Ethics on our website at https://www.riotblockchain.com/investors/corporate-governance. Information contained on or accessible via our website is not incorporated by reference into this Proxy Statement or any other report we file with the SEC. Board’s Role in Corporate Governance Matters The Board oversees the management of the business and affairs of the Company. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved for the stockholders. Our Board has been focused on, and committed to, responsible and effective corporate governance. Our Board members conduct candid and constructive discussions and deliberations among themselves and with management and outside advisors regarding the strategic vision of the Company and in fulfilment of their oversight role with respect to the Company’s executive officers. Further, our Board operates with a robust committee structure consisting of the Board’s three standing committees, Audit, Compensation and Human Resources, and Governance and Nominating, each of which fulfill various aspects of the Board’s overall oversight and strategic roles. Each committee elects a chairpersonchair from among its members to oversee and set the agendas for the committee’s meetings. As part of the Board’s role in overseeing the governance and structure of our business, the Board oversees the Company’s executive officers, including overseeing the partitioning of the various executive officers’ roles and responsibilities within the Company. Our Board has adopted Corporate Governance Guidelines based on the best practices in our industry and the Board continues to review and adapt them over time. Our Governance and Nominating Committee is responsible for overseeing our Corporate Governance Guidelines, and reporting and making recommendations to our Board concerning corporate governance matters. Our Board regularly reviews our Corporate Governance Guidelines and updates them periodically in response to changing regulatory requirements and evolving governance practices. Our Corporate Governance Guidelines, Articles of Incorporation and Bylaws address various governance matters including, but not limited to, the following: Rules regarding the role and responsibilities of the Board and of each individual director, including director compensation, orientation, and continuing education standards; Rules regarding Board composition, including selecting the ChairpersonChair of the Board and establishing the Board’s committees and their membership, as well as establishing and overseeing membership criteria and director independence; TABLE OF CONTENTS Rules regarding the submission of director nominees for election by our stockholders; Rules regarding the voting standard for the election of directors; Rules regarding Board meetings, including the calling of meetings and establishing their schedules and agenda; Rules regarding the conduct of executive sessions of independent directors and the situations requiring such executive sessions to be held; Rules regarding the Board’s access to management; Establishing the procedures for management succession planning; Named executive officer performance evaluation and compensation; Rules establishing and overseeing stock ownership guidelines for directors, executive officers and employees; Rules regarding restrictions on transactions in our securities by our directors, executive officers, and other persons in possession of material non-public information, including restrictions on hedging and pledging transactions, as well as on transactions involving margin accounts; and Board and committee self-evaluations to assess the effectiveness of the Board and its committees at fulfilling their various mandates. A copy of our Corporate Governance Guidelines is available online by navigatingat https://www.riotblockchain.com/ investors/corporate-governance. Board Orientation and Continuing Education Each member of our Board is required to participate in board orientation programs which are designed to familiarize new Board members with the “Governance” tabCompany’s business, strategies, and policies which provides new Board members assistance in developing Company and industry knowledge to optimize their service on the “Investors” page of our website, www.RiotBlockchain.com.Board. The Governance and Nominating Committee and management are responsible for maintaining the director orientation programs as well as director continuing education programs. The Board Structurecontinuing education programs assist in maintaining and Independence enhancing skills necessary to perform Board responsibilities. Continuing education programs may include internally developed programs, programs presented by third parties, and financial and administrative support to attend qualifying academic or other independent programs. Board Leadership Structure Our Bylaws provide that the Board is responsible for setting the size of the Board and for nominating individuals to stand for election to the Board by our stockholders. The Board has set the number of directors at five and is currently comprised of three non-employee independent directors and two executive directors who serve as part of our executive management team. Our Bylaws also provide for a classified board, comprised of three approximately equal-in-size classes of directors (Class(Class I, Class II, and Class III), with one of the three classes of directors standing for election at each annual general meeting of stockholders. At this time, the Board believes that the classified board structure is in the best interest of the Company. The classified board structure and corresponding terms will ensure that at any given time the majority of the directors will have deep knowledge of the Company and a firm understanding of its goals, and it allows for continuity and stability of the Board, promoting the balance of long-term and short-term interests of the Company and its stockholders. The structure also safeguards the Company from third-party takeover attempts, as it will require a longer period to change majority control of the Board. A classified board remains accountable to the Company’s stockholders as directors continue to have a fiduciary responsibility to the stockholders.Our Bylaws further provide that the Board may establish committees from time to time as it deems necessary or expedient. Currently, the Board has established three standing committees, the Audit Committee, the Governance and Nominating Committee, and the Compensation and Human Resources Committee, each of which are comprised solely of independent directors. Our Bylaws provide that at least three directors serving on the Board must be “independent directors” TABLE OF CONTENTS within the meaning of the Nasdaq continued listing standards and stock market rules (the “Nasdaq Market Rules”) and applicable SEC rules and regulations. The Board, upon recommendation of the Governance and Nominating Committee, unanimously determined that each of our three (3) non-employee directors is “independent,” as such term is defined in the Nasdaq Market Rules and the applicable SEC rules. The definition of “independent director” included in the Nasdaq Market Rules includes a series of objective tests, such as whether the director is not an employee of the Company, has not engaged in various types of specified business dealings with the Company, and does not have an affiliation with an organization that has had specified business dealings with the Company. Consistent with the Company’s Corporate Governance Principles, the Board’s determination of independence is made in accordance with the Nasdaq Market Rules and the applicable SEC rules. Even though the Governance and Nominating Committee and the Board have determined that each of the nominated directors are “independent” according to the objective tests included in the Nasdaq Market Rules, the Board, as required by the Nasdaq Market Rules, has also made a subjective determination with respect to each director that such director has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and therefore meets the standards of independence required of “independent” directors under the Nasdaq Market Rules. Additionally, the Board has affirmatively determined that each of the three members of its three standing committees, Ms. Hannah Cho, Mr. Hubert Marleau, and Mr. Lance D’Ambrosio, are each deemed “independent” (as that term is defined under the applicable rules and regulations of the SEC and the Nasdaq Market Rules, including the additional Audit Committee member and Compensation Committee member independence standards set forth in the Nasdaq continued listing standards). Our Board’s leadership is currently comprised of our Executive Chairperson,Chairman, Benjamin Yi, and a Lead Independent Director, Hubert Marleau, each of whom were elected from the directors on the Board. Following the appointment of Benjamin Yi as our Executive ChairpersonChairman in May 2021, the Board appointed Hubert Marleau to serve as the Lead Independent Director on our Board, having considered his strong leadership, independent presence and financial and business expertise on the Board. Mr. Marleau, together with Mr. Yi and our Chief Executive Officer, Jason Les (who also serves as an executive director on our Board), comprise our senior Board leadership, which the Board believes is appropriate at this time to provide the most effective leadership structure for the Company, which operates in a highly competitive and rapidly changing technology industry. The Executive ChairpersonChairman oversees and sets the agendas for the meetings of the Board, and the Lead Independent Director fills the Executive Chairperson’sChairman’s role under the circumstances outlined below. As Lead Independent Director for the Board, Mr. Marleau is responsible for overseeing the conduct of meetings where our Bylaws, Nasdaq Market Rules, applicable SEC rules and regulations, or Nevada law require our Executive Chairperson,Chairman, Mr. Yi, to be absent. During such meetings, Mr. Marleau has broad authority and oversight over the affairs of the Board. The Board believes its actions in adapting its leadership structure in response to the changes in its leadership and the challenges faced by the Company are evidence of its proactive commitment to strong corporate governance and appropriate independent director oversight of management. Board’s Role in Risk Oversight The Board plays an active role in risk oversight of the Company. The Board does not have a formal risk management committee, but rather administers this oversight function through it three standing committees, the Audit Committee, the Governance and Nominating Committee, and the Compensation and Human Resources Committee, which are described below. Our Board believes the following are certain key factors providing it appropriate opportunities for oversight, discussion and evaluation of Riot’s decisions and direction: (i) director independence, experience and knowledge; (ii) the ability of independent directors to participate in the agenda-setting process for our Board and committee meetings; (iii) the conduct of regularly scheduled executive sessions of independent directors; and (iv) our directors’ access to management. TABLE OF CONTENTS The Board’s three standing committees play a key role in fulfilling the Board’s risk oversight function. Below is a brief description of the roles and activities of the Board’s standing committees in fulfilling this function. A more complete description of each of the committees can be found beginning on page 1817 below.
The Audit Committee periodically reviews overall enterprise risk management, in addition to maintaining responsibility for oversight of financial reporting-related risks, including those related to the Company’s accounting, auditing and financial reporting practices. The Audit Committee also reviews reports and considers any material allegations regarding potential violations of the Company’s Code of Ethics and Business Conduct.
The Governance and Nominating Committee oversees corporate governance risks and oversees and advises the Board with respect to the Company’s policies and practices regarding significant issues of corporate responsibility.
The Compensation and Human Resources Committee oversees the Company’s compensation practices, including establishing and overseeing performance-oriented incentives to attract and retain highly qualified personnel for positions of substantial responsibility with the Company, evaluating and making recommendations to the Board with respect to incentive-compensation plans and equity-based plans, evaluating risks associated with the Company’s compensation policies and programs, and evaluating the adequacy of its current executive compensation and benefit plan, policies and programs. The Committee also oversees the Company’s personnel development and training, its human resources practices, including oversight of its management succession planning, and the maintenance of the Company’s corporate culture.Director Attendance at Board, Committee, and Other Meetings Our Board and its three standing committees meet throughout the year on a set schedule and also hold special meetings and may act by written consent from time to time as appropriate. Directors are expected to attend regular Board meetings and meetings of the committees on which they serve, with the understanding that, on occasion, a director may be unable to attend a meeting. In 2020,2021, the Board held 1217 regular meetings and also took additional actions by unanimous written consent, as permitted by our Bylaws and Nevada law. Each director attended 100% of the regular and special meetings of the Board and of the committees on which he or she served that were held during his or her term of office. All directors at the timethen-serving attended last year’s annual general meeting of stockholders, and, to the Company’s knowledge, all of our current directors will attend this year’s Annual Meeting. In addition to formal meetings of the Board and its three standing committees, directors meet and confer on an informal basis throughout the year. While no formal business is decided at these informal meetings, the Board believes participating in them better enables its members to carry out the Board’s oversight functions and to more rapidly respond to emerging opportunities and challenges facing the Company as they arise. The Board also holds executive sessions of its members qualified as “independent directors” within the meaning of the Nasdaq Market Rules and applicable SEC rules and regulations in connection with regularly scheduled Board meetings and at such other times as they deem appropriate. Executive sessions of independent directors are provided for in the agenda for each regularly scheduled Board meeting. Each of the independent directors attended 100% of the regular and special executive sessions that were held during his or her term of office. An important part of the executive sessions of independent directors of our Board and its three standing committees is the discussion of results from the annual self-evaluations undertaken by our Board and its standing committees, the design of which is for continuous improvement in performance and effectiveness. Our Governance and Nominating Committee facilitates our Board’s annual self-evaluation. Communications withWith the Board Stockholders wishing
Should stockholders wish to communicate with the Board, should writecorrespondence may be sent to the Board of Directors at: Riot Blockchain, Inc., 202 6th3855 Ambrosia Street, Suite 401,301, Castle Rock, Colorado 80104, 80109, Attention: Board of Directors, and specifically request that a copy of the letter be distributed to a particular Board member or to all Board members. Where no such specific request is made, the letter will be distributed to all Board members if material, in the judgment of the Chief Executive Officer, to matters on the Board’s agenda. TABLE OF CONTENTS Committees of the Board of directors
COMMITTEES OF THE BOARD OF DIRECTORS Our Board has three standing committees: (i) the Audit Committee, (ii) the Governance and Nominating Committee, and (iii) the Compensation and Human Resources Committee. Each of these three standing committees is comprised solely of and chaired by non-employee independent directors, each of whom the Board has affirmatively determined is independent pursuant to the Nasdaq Market Rules and applicable SEC regulations. Each of the committees operates pursuant to its charter. The committees regularly report their activities and actions to our full Board, generally at the next Board meeting following a committee meeting. The committee charters are reviewed annually by the Governance and Nominating Committee. If appropriate, and in consultation with the chairs of the other committees, the Governance and Nominating Committee proposes revisions to the charters. The responsibilities of each committee are described in more detail below. The charter of each of our Audit Committee, Governance and Nominating Committee, and Compensation and Human Resources Committee complies with applicable Nasdaq Market Rules, SEC regulations and provisions of Nevada corporate law.Copies of each of the charters for the three standing committees are available under the “Governance” tab on the “Investors” page on our website, www.RiotBlockchain.com, at https://www.riotblockchain.com/ investors/corporate-governance, by following the link for each of the Audit Committee, the Governance and Nominating Committee, and the Compensation and Human Resources Committee, and are also available to stockholders free of charge upon written request to our Corporate Secretary at Riot Blockchain, Inc., Attention: Corporate Secretary, 202 6th3855 Ambrosia Street, Suite 401,301, Castle Rock, CO 80104.Colorado 80109. The principal functions of each of the three standing committee are summarized below.
The Company’s Audit Committee currently consists of the following three independent directors: Lance D’Ambrosio, Hubert Marleau and Hannah Cho, with Mr. D’Ambrosio serving as the Audit Committee’s Chairperson. Chair. Our Audit Committee oversees our independent registered public accounting firm and accounting and internal control matters. Our Audit Committee also assists our Board in fulfilling its responsibilities to oversee, among other things, oversight over: the integrity of our financial statements; our compliance with relevant legal and regulatory requirements; our internal controls over financial reporting; the qualifications and independence of our independent registered public accounting firm; and the performance of our internal audit function and the audit function of our independent registered public accounting firm. In addition to these key oversight functions, our Audit Committee is responsible for, among other matters, the following: Directly appointing, compensating, retaining, terminating and overseeing the work of our independent registered public accounting firm; Pre-approving, or adopting appropriate procedures to pre-approve, all audit services, internal control-related services and non-audit services to be provided by our independent registered public accounting firm; Reviewing and discussing with our independent registered public accounting firm and our management (i) any major issues regarding accounting principles and financial statement presentations, including any significant changes in the selection or application of accounting principles, (ii) the effect of regulatory and accounting initiatives or actions applicable to us, as well as off-balance sheet structures, on our financial statements, and (iii) any major issues concerning the adequacy of our internal controls and any special steps adopted in light of any material control deficiencies; Discussing guidelines and policies governing the process by which our management assesses and manages major risk exposures; Reviewing and discussing our earnings press releases with management and our independent registered public accounting firm; and Reviewing and discussing with our independent registered public accounting firm and our management quarterly and year-end operating results, reviewing our interim financial statements included in our Quarterly Reports on Form 10-Q, and recommending to our Board the inclusion of our annual financial statements in our Annual Reports on Form 10-K. A more detailed description of our Audit Committee’s purposes and responsibilities is contained in its charter, which is available online by navigating to the “Governance” tab on the “Investors” page of our website, www.RiotBlockchain.comat https://www.riotblockchain.com/investors/corporate-governance.
TABLE OF CONTENTS The Board has affirmatively determined in its business judgment that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under SEC rules, the Sarbanes-Oxley Act of 2002, and the Nasdaq Market Rules. The Board has determined, in its business judgment, that Mr. D’Ambrosio of the Audit Committee meets the qualifications of an “audit committee financial expert,” as that term is defined under the SEC rules, and that all three members of the Audit Committee are independent of Riot.The Audit Committee held 12twelve (12) meetings (including by written consent) during the fiscal year ended December 31, 2020,2021, and 10four (4) meetings (including by written consent) to date in the fiscal year ending December 31, 2021,2022, including meeting regularly with the Company’s Auditor, both privately and with representatives of the Company’s management present.
REPORT OF THE AUDIT COMMITTEE
The following Report of our Audit Committee (“Report”) does not constitute soliciting material and this Report should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Report by reference therein.
The role of the Audit Committee is, among other things, to assist the Board in its oversight of the following: the integrity of Riot’s financial statements; Riot’s compliance with relevant legal and regulatory requirements; Riot’s internal controls over financial reporting; the qualifications and independence of Riot’s independent registered public accounting firm; and the performance of Riot’s internal audit functions and that of its independent registered public accounting firm.
The Board has determined that, in its business judgment, all members of the Audit Committee are independent within the meaning of the Nasdaq Market Rules, the Sarbanes-Oxley Act of 2002 and related rules of the SEC.
Riot’s management is responsible for the preparation, presentation and integrity of Riot’s financial statements and the effectiveness of Riot’s system of internal control over financial reporting and disclosure controls and procedures. Management is responsible for maintaining and evaluating appropriate accounting and financial reporting practices and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations.
The Audit Committee, on behalf of the Company, engaged Marcum LLP (“Marcum”) as its independent registered public accounting firm for the years ended December 31, 2018, 2019 and 2020, as well as for the year ending December 31, 2021. Pursuant to its engagement, Marcum is responsible for auditing Riot’s consolidated financial statements and expressing an opinion as to whether such financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States. Marcum was also responsible for auditing the effectiveness of Riot’s internal control over financial reporting for the year’s ended December 31, 2018 and 2019.
The Audit Committee has met and held discussions with the Company’s management and Marcum. The Audit Committee discussed with the Company’s management and Marcum the overall scope of, and plans for, their respective audits and the identification of audit risks. The Audit Committee also met with Marcum and Riot’s Chief Financial Officer (principal financial officer and principal accounting officer), with and without management present, to discuss the results of their respective examinations, the reasonableness of significant judgments, the evaluations of Riot’s internal controls over financial reporting and the overall quality of Riot’s financial reporting. Management has represented to the Audit Committee that Riot’s consolidated financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles.
In the performance of its oversight function, the Audit Committee has:
| · | Reviewed and discussed Riot’s internal controls over financial reporting with management and Marcum, including a review of management’s report on its assessment and for the year’s ended December 31, 2018 and 2019, Marcum’s audit of the effectiveness of Riot’s internal controls over financial reporting and any significant deficiencies or material weaknesses identified by such audit; |
| · | Considered, reviewed and discussed the audited financial statements with management and Marcum, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices; |
| · | Discussed with Marcum the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties; |
| · | Received, reviewed and discussed the written disclosures and the letter from Marcum required by applicable requirements of the Public Company Accounting Oversight Board regarding Marcum’s communications with the Audit Committee concerning independence; and |
| · | Reviewed the services provided by Marcum other than its audit services and considered whether the provision of such other services by Marcum is compatible with maintaining its independence, discussed with Marcum its independence, and concluded that Marcum is independent from Riot and its management. |
In reliance on the reports, reviews and discussions described in this Report, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in Riot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as amended on Form 10-K/A, for filing with the SEC and for inclusion in the Company’s proxy materials to be provided to the Company’s stockholders in advance of its annual stockholders’ meeting for the year ending December 31, 2021. The Audit Committee also has appointed, and has requested stockholder ratification of the appointment of, Marcum as Riot’s independent registered public accounting firm for the fiscal year ending December 31, 2021.
Respectfully submitted,
The Audit Committee of Riot Blockchain, Inc.
Lance D’Ambrosio, Chairperson
Hubert Marleau
Hannah Cho
Compensation and Human Resources Committee The Company’s Compensation and Human Resources Committee currently consists of the following three independent directors, each of whom the Board has determined meet the director independence requirements of the Nasdaq Market Rules and applicable SEC regulations for service on a public company’s compensation committee: Hannah Cho, Lance D’Ambrosio and Hubert Marleau, with Ms. Cho serving as the committee’s Chairperson.Chair. The Compensation and Human Resources Committee, among other things, is responsible for: | · | Reviewing and making recommendations to the Board with respect to the compensation of our officers and directors, including the Chief Executive Officer; |
| · | Overseeing and administering the Company’s executive compensation plans, including equity-based awards; |
| · | Negotiating and overseeing employment agreements with officers and directors; |
| · | Overseeing how the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-taking incentives; |
| · | Establishing and overseeing performance-based incentive programs to attract and retain personnel for positions of substantial responsibility with the Company; |
| · | Overseeing the Company’s personnel development and training programs, its human resources practices, including oversight of management succession planning; and |
| · | Overseeing maintenance of the Company’s corporate culture. |
Reviewing and making recommendations to the Board with respect to the compensation of our officers and directors, including the Chief Executive Officer; Overseeing and administering the Company’s executive compensation plans, including equity-based awards; Negotiating and overseeing employment agreements with officers and directors; Overseeing how the Company’s compensation policies and practices may affect the Company’s risk management practices and/or risk-taking incentives; Establishing and overseeing performance-based incentive programs to attract and retain personnel for positions of substantial responsibility with the Company; Overseeing the Company’s personnel development and training programs, its human resources practices, including oversight of management succession planning; and Overseeing maintenance of the Company’s corporate culture. A more detailed description of our Compensation and Human Resources Committee’s purposes and responsibilities is contained within its charter, which is available online by navigating to the “Governance” tab on the “Investors” page of our website, www.RiotBlockchain.comat https://www.riotblockchain.com/investors/corporate-governance. When evaluating the compensation of our executive officers, the Compensation and Human Resources Committee evaluates factors including the executive’s responsibilities, experience, and the competitive marketplace. The Compensation and Human Resources Committee may also invite the senior executives and other members of management to participate in their deliberations, or to provide information to the Compensation and Human Resources Committee for its consideration with respect to such deliberations, except that the Executive Chairman and Chief Executive Officer may not be present for the deliberation of or the voting with respect to his or her compensation. The Executive Chairman and Chief Executive Officer may, however, be present for the deliberation of or the voting on compensation for any other person, including other executive officers, if any. The Compensation and Human Resources Committee has authority to retain such compensation consultants, outside counsel and other advisors as the Compensation and Human Resources Committee in its sole discretion deems appropriate. The Compensation and Human Resources Committee retained Meridian ConsultantsCompensation Partners, LLC (“Meridian”) in connection with the preparation of the Riot Blockchain, Inc. 2019 Equity Plan, which was ratified and approved by the stockholders at the 2019 Annual General Meeting, and the First Amendment to the Riot Blockchain, Inc. 2019 Equity Plan, which was ratified and approved by the stockholders at the 2020 Annual Meeting. The CompensationGeneral Meeting, and Human Resources Committee has also retained Meridian Consultants in connection with the preparation of the Second Amendment to the Riot Blockchain, Inc. 2019 Equity Plan, as amended, which is being submitted for stockholder approvalwas ratified and approved by stockholders at the 2021 Annual General Meeting. The Compensation and Human Resources Committee’s retention of Meridian Consultants, LLC, as theirits compensation advisor with respect to the committee’sCompensation Committee’s evaluation of the Company’s compensation practices, including its equity incentive compensation planning, is pursuant to a direct engagement agreement between the committee and Meridian Consultants, LLC.Meridian. The Compensation and Human Resources Committee has instructed Meridian Consultants to provide comparative information regarding companies of similar size and in related industries as Riot Blockchain and to analyze the Company’s historical and current compensation to assist the committee
TABLE OF CONTENTS Compensation Committee with its evaluation of the Company’s compensation practices and future needs. The Board has affirmatively determined that each member of the Compensation and Human Resources Committee meets the additional independence criteria applicable to Compensation and Human Resources Committee members under the Nasdaq Market Rules and the applicable SEC rules. The Compensation and Human Resources Committee held 10seventeen (17) meetings (including by written consent) during the fiscal year ended December 31, 2020, 2021, and 14five (5) meetings (including by written consent) to date in the fiscal year ending December 31, 2021.Governance and Nominating Committee The Company’s Governance and Nominating Committee currently consists of the following independent directors, each of whom the Board has determined meet the director independence requirements of the Nasdaq Market Rules and applicable SEC regulations for service on a public company’s governance and nominating committee: Hubert Marleau, Lance D’Ambrosio, and Hannah Cho. Mr. Marleau serves as ChairpersonChair of the Governance and Nominating Committee. The Governance and Nominating Committee, among other things, is responsible for: | · | Reviewing and assessing the development of the executive officers, and considering and making recommendations to the Board regarding promotion and succession issues; |
| · | Evaluating and reporting to the Board on the performance and effectiveness of the directors, committees, and the Board as a whole; |
| · | Working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise, and experience, including diversity considerations, for the full Board and each committee; |
| · | Annually presenting to the Board a list of individuals recommended to be nominated for election to the Board; |
| · | Reviewing, evaluating, and recommending changes to the Company’s Corporate Governance Guidelines and committee charters; |
| · | Recommending to the Board individuals to be elected to fill vacancies and newly created directorships; |
| · | Overseeing the Company’s compliance program, including the Code of Ethics and Business Conduct; and |
| · | Overseeing and evaluating how the Company’s corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect the Company’s major risk exposures. |
Reviewing and assessing the development of the executive officers, and considering and making recommendations to the Board regarding promotion and succession issues; Evaluating and reporting to the Board on the performance and effectiveness of the directors, committees, and the Board as a whole; Working with the Board to determine the appropriate and desirable mix of characteristics, skills, expertise, and experience, including diversity considerations, for the full Board and each committee; Annually presenting to the Board a list of individuals recommended to be nominated for election to the Board; Reviewing, evaluating, and recommending changes to the Company’s Corporate Governance Guidelines and committee charters; Recommending to the Board individuals to be elected to fill vacancies and newly created directorships; Overseeing the Company’s compliance program, including the Code of Ethics and Business Conduct; and Overseeing and evaluating how the Company’s corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect the Company’s major risk exposures. A more detailed description of our Governance and Nominating Committee’s purposes and responsibilities is contained within its charter, which is available at our website at: https://ir.riotblockchain.com/governance-docswww.riotblockchain.com/investors/ corporategovernance. The Board has affirmatively determined that each member of the Governance and Nominating Committee meets the independence criteria applicable to compensationgovernance and nominating committee members under the Nasdaq Market Rules and applicable SEC rules and regulations.rules. The Governance and Nominating Committee held twosix (6) meetings (including by written consent) during the fiscal year ended December 31, 2020, 2021, and five meetingsone (1) meeting (including by written consent) to date in the fiscal year ending December 31, 2021.2022. Consideration of Director Nominees As specified in our Corporate Governance Guidelines, we seek directors with the highest standards of ethics and integrity, sound business judgment, and the willingness to make a strong commitment to the Company and its success. The Governance and Nominating Committee works with the Board on an annual basis to determine the appropriate and desirable mix of characteristics, skills, expertise, and experience for the full Board and each committee, taking into account both existing directors and all nominees for election as directors, as well as any diversity considerations and the membership criteria reflected in the Corporate Governance Guidelines. The Governance and Nominating Committee and the Board, which do not have a formal diversity policy, consider diversity in a broad sense when evaluating board composition and nominations; they seek to include directors with a diversity of experience, professions, viewpoints, skills, and backgrounds that will enable them to make significant contributions to the Board TABLE OF CONTENTS and the Company, both as individuals and as part of a group of directors. The Board evaluates each individual in the context of the full Board, with the objective of recommending a group that can best contribute to the success of the business and represent stockholder interests through the exercise of sound judgment. In determining whether to recommend a director for re-election, the Governance and Nominating Committee also considers the director’s attendance at meetings and participation in and contributions to the activities of the Board and its committees. The Governance and Nominating Committee will consider director candidates properly recommended by stockholders by providing notices of stockholder proposals in compliance with our Bylaws and Rule 14a-8 of the Securities Exchange Act of 1934, as amended.applicable law. The Governance and Nominating Committee’s process for considering such stockholder recommendations is no different than its process for screening and evaluating candidates suggested by directors, our management, or third parties. It is the Board’s practice to maintain a fair and straightforward non-employee director compensation program that is also designed to be competitive with director compensation programs of the Company’s peers. The Compensation Committee periodically reviews the type and form of compensation paid to our non-employee directors in consultation with independent compensation consultants the Committee engages from time to time and recommends, for approval by the Board, the amount and form of director compensation. In recommending changes to the Company’s director compensation package, the Compensation Committee reviews market data provided by independent compensation consultants and considers whether any changes in director compensation are required to enable the Company to retain talented Board members, who, as members of the Board, are responsible for setting the Company’s strategic vision, overseeing its growth and development, and protecting its stockholders’ interests. Board members who are also our employees receive no compensation for their service as Board members. Our directors who also served as executive officers, Messrs. Yi and Les, did not receive any additional compensation for their services as directors for the year ended December 31, 2021. Director Stock Ownership Guidelines We believe stock ownership by our non-employee directors aligns their interests with the interests of our stockholders. Accordingly, our Board has established Stock Ownership Guidelines (the “Guidelines”) for our non-employee directors who receive equity grants as part of their compensation for serving as such. Such guidelines are expressed as a multiple of each director’s annual cash retainer. It is anticipated that the directors should be able to achieve these Guidelines within five (5) years of the effective date of the Guidelines, January 10, 2022, or if newly appointed to the Board, within five (5) years of joining. Equity Compensation Generally, on the date of each annual general meeting of stockholders, each of our non-employee directors is granted restricted stock units (“RSUs”), subject to any interim adjustments authorized by the Compensation Committee and approved by the Board. The shares of our common stock underlying the RSUs granted to non-employee directors vest in quarterly installments beginning on the first quarter following the date of grant (on the same day of the month as the date of grant) but will vest in full on the date of the next annual general meeting of stockholders if not fully vested on such date, subject to continued service through each vesting date. Directors who are appointed mid-year receive a pro-rated RSU grant based on the number of months between their appointment date and the date of our next annual general meeting of stockholders. TABLE OF CONTENTS Director Compensation Table The compensation paid or awarded, denominated in U.S. Dollars, to our directors, as of December 31, 2021 for fiscal year 2021 is set forth in the table below. Benjamin Yi(2) | | | — | | | — | | | — | | | — | Jason Les(3) | | | — | | | — | | | — | | | — | Hubert Marleau(4) | | | 57,000 | | | 498,250 | | | — | | | 555,250 | Hannah Cho(5) | | | 55,571 | | | 498,250 | | | — | | | 553,821 | Lance D’Ambrosio(6) | | | 38,129 | | | 339,125 | | | — | | | 377,254 |
(1)
| The “Stock Awards” column reflects the aggregate grant date fair value for RSU awards granted during the fiscal year ended December 31, 2021, computed in accordance with FASB ASC Topic 718. See Note 12 to our consolidated financial statements included in our 2021 Annual Report on Form 10-K, as amended on Form 10-K/A, for details as to the assumptions used to determine the grant date fair value of the restricted stock awards. The aggregate number of stock awards outstanding at fiscal year ended December 31, 2021 is 4,182,298, including 4,015,146 unvested shares, as reported in our 2021 Annual Report on Form 10-K, as amended on Form 10-K/A, and 167,152 vested shares. |
(2)
| Mr. Yi currently serves as our Executive Chairman, making him an executive officer of the Company. Accordingly, commencing May 24, 2021, Mr. Yi no longer receives additional compensation for his services as a director of the Board. Prior to his appointment as our Executive Chairman, Mr. Yi was an independent director on the Board and a member of each of its three standing committees, including serving as chair of the Audit Committee. In accordance with Item 402(k)(2) of Regulation S-K, the 2021 amounts paid to Mr. Yi in consideration of his services as an independent director, Board chair and chair of the Audit Committee prior to his appointment as our Executive Chairman (including cash fees of $64,667 and the 10,000 RSUs awarded to him on February 9, 2021, all of which were vested as of December 31, 2021) are reported under “Executive Compensation Tables”. |
(3)
| On February 8, 2021, Mr. Les was appointed as our Chief Executive Officer. Accordingly, commencing February 8, 2021, Mr. Les no longer receives additional compensation for his services as a director on the Board. Prior to his appointment as our Chief Executive Officer, Mr. Les was an independent director on the Board and a member of each of its three standing committees, including serving as chair of the Compensation Committee. In accordance with Item 402(k)(2) of Regulation S-K, the 2021 amounts paid to Mr. Les in consideration of his services as an independent director and chair of the Compensation Committee prior to his appointment as our Chief Executive Officer (including cash fees of $12,857) are reported under “Executive Compensation Tables”. |
(4)
| Mr. Marleau currently serves as an independent director on our Board and as Chair of its Governance and Nominating Committee. Stock awards includes 12,500 RSUs granted at a fair value of $38.96, 2,500 of these rights vested immediately and the remaining 10,000 rights were fully vested as of December 31, 2021, issued under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Mr. Marleau and the Company as compensation for Mr. Marleau’s service as a director for the fiscal year ended December 31, 2021. Pursuant to the equity award agreement, these RSUs vested in 2021 and upon vesting and settlement by the Company, are convertible into shares of our common stock, on a one-for-one basis. |
(5)
| Ms. Cho currently serves as an independent director on our Board and as Chair of its Compensation Committee. Stock awards includes 12,500 RSUs granted at a fair value of $38.96, 2,500 of these rights vested immediately and the remaining 10,000 rights were fully vested as of December 31, 2021, issued under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Ms. Cho and the Company as compensation for Ms. Cho’s service as a director for the fiscal year ended December 31, 2021. Pursuant to the equity award agreement, these RSUs vested in 2021 and, upon vesting and settlement by the Company, are convertible into shares of our common stock, on a one-for-one basis. |
(6)
| Mr. D’Ambrosio currently serves as an independent director on our Board and as Chair of its Audit Committee. Stock awards includes 12,500 RSUs granted at a fair value of $27.13, 2,500 of these rights vested immediately and the remaining 7,500 rights were fully vested as of December 31, 2021, issued under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Mr. D’Ambrosio and the Company, as amended, as compensation for Mr. D’Ambrosio’s service as a director for the fiscal year ended December 31, 2021. Pursuant to the equity award agreement, these RSUs vested in 2021 and, upon vesting and settlement by the Company, are convertible into shares of our common stock, on a one-for-one basis. |
TABLE OF CONTENTS EXECUTIVE OFFICERS AND MANAGEMENTPROPOSAL NO. 2RATIFICATION OF AUDITOR APPOINTMENT We are asking our stockholders to ratify the appointment and engagement by our Audit Committee of Marcum LLP, to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Although our Bylaws do not require that our stockholders approve the appointment of our independent registered public accounting firm, the Audit Committee is submitting the selection of Marcum LLP to our stockholders for ratification as a matter of good corporate practice and because we value our stockholders’ views on our independent registered public accounting firm. If our stockholders vote against the ratification of Marcum LLP, the Audit Committee will consider this in its selection of auditors for the following year. Even if our stockholders ratify the appointment, the Audit Committee may choose to appoint a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the interest of our Company and our stockholders. The Audit Committee has retained Marcum LLP as the Company’s independent registered public accounting firm, to perform the audit of the Company’s consolidated financial statements for the fiscal year ending December 31, 2022, to be included on the Company’s annual report on Form 10-K for the same period. The Audit Committee previously retained Marcum LLP to serve as the Company’s independent public accounting firm and to perform such audit services for the fiscal years ended December 31, 2018, 2019, 2020 and 2021. A representative of Marcum LLP is expected to be present virtually at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions. During our two most recent fiscal years through December 31, 2021, and the subsequent interim period through July 27, 2022, neither the Company nor anyone on the Company’s behalf consulted Marcum LLP regarding either (1) the application of accounting principles to a specified transaction regarding us, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (2) any matter regarding us that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K). Audit Fees The Company’s Audit Committee currently has a policy in place that requires its review and pre-approval of all audit and permissible non-audit services provided by its independent auditors. These services requiring pre-approval by the Audit Committee may include audit services, audit related services, tax services and other services. All the services performed by the independent registered public accounting firm were approved by the Company’s Audit Committee and prior to performance. The Audit Committee has determined that the payments made to its independent accountants for these services are compatible with maintaining such auditors’ independence. Aggregate fees billed or expected to be billed for professional services for the years ended December 31, 2021 and 2020 in the following categories and amounts were: Audit Fees(1) | | | $831,025 | | | $413,545 | Audit-Related Fees | | | — | | | — | Tax Fees(2) | | | 55,220 | | | 47,250 | All Other Fees | | | — | | | — | Total Fees | | | $886,245 | | | $460,795 |
(1)
| Audit fees relate to the financial statement audits, the quarterly reviews and related matters. Audit fees include services rendered by Marcum LLP, our independent registered public accounting firm, for the 2021 and 2020 audits totaling $705,365 and $262,650, respectively. Fees also include services rendered by Marcum LLP for their reviews of the interim condensed consolidated financial statements included in the Company’s Form 10-Qs during the first three quarters of 2021 and 2020 totaling $74,160 and $85,490. Audit fees include services, including services related to the review of our registration statements by Marcum LLP, in 2021 and 2020, totaling $51,500 and $65,405. |
(2)
| Tax Fees include fees for services rendered for tax compliance and related matters. There were no Tax Fees incurred with or services provided by our auditors, Marcum LLP in 2021 or 2020. |
Our principal accountant (through its full-time employees) performed all work regarding the audit of our financial statements for the most recently completed fiscal year. TABLE OF CONTENTS Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors All of the services performed in the years ended December 31, 2021 and December 31, 2020 were pre-approved by the Audit Committee. It is the Audit Committee’s policy to pre-approve all audit and permissible non-audit services to be provided to us by the independent registered public accounting firm. Our Audit Committee pre-approves these services by category and service. In addition, the Audit Committee has considered whether the provision of the non-audit services above is compatible with maintaining the independent registered public accounting firm’s independence. TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE The following Report of our Audit Committee (“Report”) does not constitute soliciting material and this Report should not be deemed filed or incorporated by reference into any other previous or future filings by us under the Securities Act of 1933 (the “Securities Act”), as amended, or the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, except to the extent we specifically incorporate this Report by reference therein. The role of the Audit Committee is, among other things, to assist the Board in its oversight of the following: the integrity of Riot’s financial statements; Riot’s compliance with relevant legal and regulatory requirements; Riot’s internal controls over financial reporting; the qualifications and independence of Riot’s independent registered public accounting firm; and the performance of Riot’s internal audit functions and that of its independent registered public accounting firm. The Board has determined that, in its business judgment, all members of the Audit Committee are independent within the meaning of the Nasdaq Market Rules, the Sarbanes-Oxley Act of 2002 and related rules of the SEC. Riot’s management is responsible for the preparation, presentation and integrity of Riot’s financial statements and the effectiveness of Riot’s system of internal control over financial reporting and disclosure controls and procedures. Management is responsible for maintaining and evaluating appropriate accounting and financial reporting practices and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Audit Committee, on behalf of the Company, engaged Marcum LLP (“Marcum”) as its independent registered public accounting firm for the years ended December 31, 2018, 2019, 2020 and 2021, as well as for the year ending December 31, 2022. Pursuant to its engagement, Marcum is responsible for auditing Riot’s consolidated financial statements and expressing an opinion as to whether such financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States. Marcum was also responsible for auditing the effectiveness of Riot’s internal control over financial reporting for the years ended December 31, 2018, 2019 and 2021. The Audit Committee has met and held discussions with the Company’s management and Marcum. The Audit Committee discussed with the Company’s management and Marcum the overall scope of, and plans for, their respective audits and the identification of audit risks. The Audit Committee also met with Marcum and Riot’s Chief Financial Officer (principal financial officer and principal accounting officer), with and without management present, to discuss the results of their respective examinations, the reasonableness of significant judgments, the evaluations of Riot’s internal controls over financial reporting and the overall quality of Riot’s financial reporting. Management has represented to the Audit Committee that Riot’s consolidated financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles. In the performance of its oversight function, the Audit Committee has: Reviewed and discussed Riot’s internal controls over financial reporting with management and Marcum, including a review of management’s report on its assessment and for the years ended December 31, 2021, Marcum’s audit of the effectiveness of Riot’s internal controls over financial reporting and any significant deficiencies or material weaknesses identified by such audit; Considered, reviewed and discussed the audited financial statements with management and Marcum, including a discussion of the quality of the accounting principles, the reasonableness thereof, significant adjustments, if any, and the clarity of disclosures in the financial statements, as well as critical accounting policies and other financial accounting and reporting principles and practices; Discussed with Marcum the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and No. 2410, Related Parties; Received, reviewed and discussed the written disclosures and the letter from Marcum required by applicable requirements of the Public Company Accounting Oversight Board regarding Marcum’s communications with the Audit Committee concerning independence; and Reviewed the services provided by Marcum other than its audit services and considered whether the provision of such other services by Marcum is compatible with maintaining its independence, discussed with Marcum its independence, and concluded that Marcum is independent from Riot and its management. TABLE OF CONTENTS In reliance on the reports, reviews and discussions described in this Report, the Audit Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in Riot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as amended on Form 10-K/A, for filing with the SEC and for inclusion in the Company’s proxy materials to be provided to the Company’s stockholders in advance of its annual stockholders’ meeting for the year ending December 31, 2022. The Audit Committee also has appointed, and has requested stockholder ratification of the appointment of, Marcum as Riot’s independent registered public accounting firm for the fiscal year ending December 31, 2022. | | | Respectfully submitted, | | | | | | | | The Audit Committee of Riot Blockchain, Inc. | | | | | | | | Lance D’Ambrosio, Chair | | | | Hubert Marleau | | | | Hannah Cho |
No Appraisal Rights Under the Nevada Revised Statutes, our stockholders are not entitled to appraisal rights with respect to our proposed ratification of the appointment of Marcum LLP as our independent registered public accounting firm, and we will not independently provide our stockholders with any such rights. Vote Required The affirmative vote of a majority of the votes cast for this proposal is required to ratify the appointment of the Company’s independent registered public accounting firm. Abstentions will be counted towards the tabulation of votes cast on this proposal but will have no effect on the outcome of the vote on this proposal. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 2: THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. TABLE OF CONTENTS “SAY-ON-PAY”
APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR
NAMED EXECUTIVE OFFICERS Pursuant to Schedule 14A of the Exchange Act, we are asking our stockholders to approve, on an advisory basis, the compensation of our “named executed officers” as disclosed in this Proxy Statement under the heading “Executive Compensation” beginning on page 29 below. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to weigh in on our named executive officers’ compensation as a whole. The Company has disclosed the compensation of the named executive officers pursuant to rules adopted by the SEC. We believe that our compensation policies for the named executive officers are designed to attract, motivate and retain talented executive officers and are aligned with the long-term interests of the Company’s stockholders. This advisory stockholders vote gives you, as a stockholder, the opportunity, on a purely advisory basis, to approve or not approve the compensation of the named executive officers that is disclosed in this Proxy Statement by voting “FOR” or “AGAINST” the following resolution (or by choosing to “ABSTAIN” with respect to the resolution): RESOLVED, that the stockholders of the Company approve all of the compensation of the Company’s executive officers who are named in the Summary Compensation Table of the Company’s 2022 Proxy Statement, as such compensation is disclosed in the Company’s 2022 Proxy Statement pursuant to Item 402 of Regulation S-K, which disclosure includes the Proxy Statement’s Summary Compensation Table and other executive compensation tables and related narrative disclosures. Because your vote is advisory, it will not be binding on either the Board or the Company. However, the Company’s Compensation Committee will take into account the outcome of the stockholder vote on this proposal at the Annual Meeting when considering future executive compensation arrangements. Your non-binding advisory votes described in this Proposal No. 3 will not be construed: (1) as overruling any decision by the Board, any Board Committee or the Company relating to the compensation of the named executive officers, or (2) as creating or changing any fiduciary duties or other duties on the part of the Board, any Board Committee or the Company. We currently hold our advisory vote to approve the compensation of our named executive officers (“Say-on-Pay vote”) annually. Stockholders have an opportunity to cast an advisory vote on the frequency of the Say-on-Pay vote at least every six years, and the next advisory vote on the frequency of the Say-on-Pay vote will be at our 2025 annual general meeting of stockholders. Vote Required The advisory vote to approve the compensation of our named executive officers will be approved if the majority of the votes cast on this proposal are cast “FOR” the proposal. Abstentions and broker non-votes will be counted as votes present for quorum purposes but will not be counted as either votes cast for or against this proposal. While the results of this advisory vote are non-binding, the Compensation Committee and the Board values the opinions of our stockholders and will consider the outcome of the vote, along with other relevant factors, in deciding whether any actions are necessary to address the concerns raised by the vote and when making future compensation decisions for executive officers. BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 3: THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS, AS STATED IN THE ABOVE NON-BINDING RESOLUTION, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY. TABLE OF CONTENTS COMPENSATION DISCUSSION AND ANALYSIS Executive Summary This Compensation Discussion and Analysis provides an overview of our executive compensation program for fiscal year 2021 and our executive compensation philosophies and objectives, as well as the compensation awarded to our fiscal year 2021 Named Executive Officers (the “NEOs”) (within the meaning of Item 402(a)(3) of Regulation S-K), who are listed below. Executive Officers and Management During 2021, the Board unanimously appointed the following individuals as our executive officers, who each hold the office set forth opposite his or her name.| Name | | Age | | Principal Occupation | | Executive Officer Since | | Benjamin Yi(1) | | 39 | | Executive Chairperson | | 2021 | | Jason Les(2) | | 35 | | Chief Executive Officer (Principal Executive Officer) | | 2021 | | Jeffrey McGonegal(3) | | 70 | | Chief Financial Officer (Principal Financial and Accounting Officer) | | 2003 | | Megan Brooks(4) | | 39 | | Chief Operating Officer | | 2021 |
———————
Benjamin Yi | | | 40 | | | Executive Chairman | | | 2021 | Jason Les | | | 36 | | | Chief Executive Officer
(Principal Executive Officer) | | | 2021 | Jeffrey McGonegal | | | 71 | | | Chief Financial Officer
(Principal Financial and Accounting Officer) | | | 2003 | Megan Brooks | | | 39 | | | Chief Operating Officer (former) | | | 2021 | William R. Jackman | | | 39 | | | General Counsel and Corporate Secretary | | | 2021 |
Mr. Yi has served on our Board since 2018. He was appointed to serve as our Executive ChairpersonChairman on May 24, 2021. As our Executive Chairperson,Chairman, Mr. Yi continues to serve as ChairpersonChair of the Board as a non-independent executive director. In this role, he is directly involved in our day-to-day operations, playing a key role in setting and fulfilling the Board’s strategic aims for the Company. A more complete biography of Mr. Yi and discussion of his qualifications can be found under the section “ Information Regarding Directors” beginning on page 89 of this Proxy Statement.
Mr. Les has served on our Board since 2017. He was appointed to serve as our Chief Executive Officer (principal executive officer) (“CEO”) onsince February 8, 2021.2021 and as a member of the Board since 2017. Mr. Les continues to serve as a member of our Board as a non-independent executive director. In this role, he is responsible for overseeing the operations of the Company and for helping to establish and then execute the Board’s strategic vision. A more complete biography of Mr. Les and discussion of his qualifications can be found under the section “ Information Regarding Directors” beginning on page 89 of this Proxy Statement.
Mr. McGonegal currently serves as the Chief Financial Officer (principal financial officer and principal accounting officer) (“CFO”) of the Company. On February 8, 2021, the Company announced that Mr. McGonegal, who was appointed CEO in early 2019, would return to focus on his long-standing position as the Company’s CFO. Mr. McGonegal had previously served as the Company’s long time CFO until April 2018 and subsequently had been assisting Riot Blockchain in a consulting role before assuming the role of CEO of the Company in early 2019. He servesserved as Corporate Secretary and served as interim President in December 2004 and January 2005. Mr. McGonegal has been an executive officer of the Company since 2003 and he brings a wealth of public company executive and financial reporting experience, including senior leadership roles working primarily with public entities by assisting them with financing, merger, and acquisition transactions, to the position of CFO of the Company. His career has spanned over forty years in senior leadership roles, working primarily with public entities (including the Company) both as an outside accountant and as chief financial and/or accounting officer, during which time he assisted these companies with financing, mergers and acquisitions, and other significant transactions. From 1974 to 1997, Mr. McGonegal was an accountant with BDO Seidman LLP (predecessor to BDO USA, LLP) (“BDO”). While at BDO, Mr. McGonegal served as Managing Partner of the Denver, Colorado office. He received a Bachelor of Science in Accounting degree from Florida State University. TABLE OF CONTENTS Effective April 7, 2022, Ms. Brooks resigned as Riot’s Chief Operating Officer, and from all other positions with the Company. Ms. Brooks was appointed to serve as the Company’s Chief Operating Officer (principal operating officer) (“COO”) on April 6, 2021. Ms. Brooks joined the Company in 2018 and has most recently served as its Vice President of Finance, where she facilitated the Company’s mining operations, including hardware procurement, site evaluation and project management at the direction of the Company’s CEO and CFO. Ms. Brooks has more than two decades of experience in operations, risk management and finance. Prior to joining the Company in 2018, Ms. Brooks served as Vice President of Operations for Capstone Associated Services, Ltd., from 2006 to 2017. Ms. Brooks bringsbrought her experience in emerging industries and navigating new regulatory environments to the position of Chief Operating Officer. She holds a B.S. in Finance along with a Master of Accountancy Certificate from the University of Houston, C.T. Bauer College of Business, with a certification in risk management, and is a licensed Risk Manager. Ms. Brooks
William R. Jackman, Esq. Mr. Jackman has beenserved as General Counsel and Corporate Secretary of the Company since July 2021. As General Counsel, Mr. Jackman manages the Company’s legal affairs drawing upon his unique business and legal acumen to support the Riot leadership team and navigates strategic decisions by developing innovative solutions. Mr. Jackman has represented Riot since September 2018 as external counsel, prior to joining the management team in July 2021. Previously, Mr. Jackman represented S&P 500 companies as well as other public companies in the areas of securities laws, mergers and acquisitions, and power generation. Additionally, he is a former member of several distinguished law firms including, a global AM100 law firm, and one the largest global law firms in Canada. In 2014, he served a secondment at the Ontario Securities Commission (OSC) in the Corporate Finance division. Mr. Jackman holds dual juris doctorate law degrees from the Universities of Windsor and Detroit, as well as an MBA from Nova Southeastern, specializing in corporate finance, where he graduated among the top of his classes in each degree. Mr. Jackman is a member of the New York, Florida and Ontario Bar Associations.
TABLE OF CONTENTS Compensation Philosophy and Objectives Compensation Philosophy We believe our people are the core driving force behind our long-term success. Our compensation philosophy is designed to align compensation with the Company’s business objectives and the creation of stockholder value. Accordingly, we compensate our executive officers with a mix of cash salaries, annual performance-based cash bonuses based on the executive officer’s individual performance, and time-based equity and performance-based equity awards granted under the Company’s 2019 Equity Plan. These equity awards are generally awarded as grants of restricted stock units (“RSUs”) that vest, in the case of RSUs subject to a service requirement, in connection with the recipient’s continuing service with the Company throughout its developmentthough the designated vesting date for the applicable award or portion of the award, and in the case of performance-based awards, upon the Company’s achievement of certain performance metrics, as a significant cryptocurrency miner, during which time she has, atdetermined by the directionCompensation Committee as the administrator of the Company’s CEO and CFO, overseen2019 Equity Plan. We believe granting our executives (and our employees more generally) equity compensation encourages them to operate like owners, linking their financial interests with the Company’s significant expansioninterests of its mining power and its operations.our stockholders. As Chief Operating Officer, shethe Company grows, we will continue to overseeevaluate our compensation philosophy and programs to ensure they continue to meet our objectives. Compensation Objectives We designed our compensation program for all employees, including our named executive officers, to support our four main compensation objectives: Market Competitiveness: Ensure our ability to recruit and retain the most talented people in a competitive market; Performance Focused: Motivate our employees to deliver the highest level of performance over the short-, medium-, and long-term by making a substantial percentage of total executive compensation variable, or “at risk”, based on individual or Company performance; Balanced: Pay for performance metrics designed to ensure our mix of fixed and variable, “at risk” compensation fairly balances with our goals of attracting and retaining top talent, while motivating employees to be high-performing through an appropriate balance of short-, medium-, and long-term incentive awards; and Alignment with Stockholders: Align employee and stockholder interests by collectively sharing in long-term success by granting employees time-based and performance-based equity awards to motivate them to continually deliver the highest level of performance to drive the Company’s operations,strategic objectives forward. Our Executive Compensation Programs for 2021 Base Salary | | | Related job experience, knowledge of the Company and our industry, and continued dedicated employment with sustained performance | | | Attract and retain talented executive officers through competitive pay programs | Annual Cash Bonus Incentive (“AIP”) | | | Achievement of the Company’s annual financial and operational objectives | | | Motivate executive officers to achieve and exceed annual business objectives. Manage total compensation costs and align them with financial performance | | | | | | | | Equity Compensation
Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units | | | Increased stockholder value through achievement of long-term strategic goals and retention of top talent to the Company | | | Align executive officers and stockholder interests to optimize stockholder value. Motivate executive officers to achieve and exceed long-term business objectives |
TABLE OF CONTENTS Role of Our Compensation and Human Resources Committee The Board has delegated to its Compensation Committee the authority and responsibility for evaluating, overseeing, and approving the Company’s executive compensation, and for overseeing and administering the Company’s compensation policies and programs, including mining, IT/Cybersecurity, Sarbanes-Oxley Actadministering the Company’s 2019 Equity Plan and its other employee benefit plans and programs. When evaluating the compensation of 2002 control design/implementation,our executive officers, the Compensation Committee evaluates factors including the executive’s responsibilities, experience and initiatives relatedthe competitive marketplace. The Compensation Committee may also invite the Company’s senior executives and other members of management to participate in its deliberations, or to provide information to the Compensation Committee for its consideration with respect to such deliberations, except that the Executive Chairman and Chief Executive Officer may not be present for the Compensation Committee’s deliberations of, or voting to approve, his or her compensation. Named executive officers may, however, be present for the deliberation of, or the voting to approve, the compensation for any other officer. The Compensation Committee has authority to retain such compensation consultants, outside counsel and other advisors as the Compensation Committee in its sole discretion deems appropriate. Role of the Compensation Consultant On an annual basis, the Compensation Committee directs its compensation consultant, Meridian, to review the Company’s compensation practices. Based on Meridian’s assessment, the Compensation Committee determines whether the overall executive compensation program is consistent with our business strategy and objectives and promotes our compensation philosophy. The Compensation Committee also takes into account the performance, experience, skills, level of responsibility and future expansion.EXECUTIVE COMPENSATION
potential of each named executive officer rather than adhering to a specific benchmarked percentage for any of our named executive officers. Taking into consideration the independence factors in the Nasdaq Market Rules, the Compensation Committee has made the determination that, in its business judgment, Meridian was independent and that its work did not raise any conflicts of interest. Fiscal Year 2020 Stockholder Advisory Vote Results At the 2021 Annual General Meeting, the Company’s stockholders approved the advisory proposal regarding the compensation of the Company’s NEOs with approximately 94.2% of the votes cast in favor of our executive compensation programs (excluding abstentions/broker non-votes). The Board appreciates the stockholders’ continued support of the Company’s compensation philosophy and objectives. This support reaffirms to the Board the appropriateness, effectiveness and market competitiveness of the Company’s executive compensation programs, including continued emphasis on programs that reward our executive officers for generating sustainable profitability and delivering long-term value for our stockholders. The Board and the Compensation Committee will continue to consider the results of the Company’s annual stockholder advisory votes when making future compensation decisions for our executive officers, including the NEOs. Executive Peer Group The Compensation Committee evaluates the Company’s executive compensation programs in comparison to those of a select peer group consisting of fourteen similarly situated professional services companies. The peer group is used to compare total direct compensation and the mix of compensation elements for each NEO against peer group positions with similar responsibilities. Summary Compensation Table The compensation we paid to our named executive officersNEOs for fiscal years 2021, 2020 and 2019 is summarized in the table below: Jason M. Les(3)
Chief Executive Officer
(principal executive officer)
| | | 2021 | | | 631,887(4) | | | — | | | 20,155,500 | | | 1,085,963(5) | | | 3,518(6) | | | 21,876,868 | | | 2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — |
TABLE OF CONTENTS | Name and Principal Position | | Year | | Salary | | Bonus | | Stock Awards (3) | | Non-Equity Incentive Plan Compensation | | All Other Compensation | | Total | | | | | | | | | ($) | | | | ($) | | | | ($) | | | | ($) | | | | ($) | | | | ($) | | | Jeffrey McGonegal, | | | 2020 | | | | 294,103 | | | | 90,000 | | | | 300,000 | | | | — | | | | 14,478 | | | | 698,581 | | | Chief Executive Officer (former) and Chief Financial Officer (1) | | | 2019 | | | | 252,248 | | | | — | | | | 175,000 | | | | — | | | | 89,191 | | | | 516,439 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Megan Brooks, | | | 2020 | | | | 175,000 | | | | 78,000 | | | | 144,000 | | | | — | | | | 4,970 | | | | 401,970 | | | Chief Operating Officer (2) | | | 2019 | | | | 136,250 | | | | — | | | | 15,000 | | | | — | | | | 4,232 | | | | 155,482 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jeffrey G. McGonegal(7)
Chief Financial Officer
(principal financial officer)
| | | 2021 | | | 354,077 | | | — | | | 17,229,300 | | | 601,931 | | | 11,162(8) | | | 18,196,470 | | | 2020 | | | 294,103 | | | 90,000 | | | 300,000 | | | — | | | 14,478 | | | 698,581 | | | 2019 | | | 252,248 | | | — | | | 175,000 | | | — | | | 89,191 | | | 516,439 | Megan M. Brooks(9)
Chief Operating Officer
(former)
| | | 2021 | | | 261,410 | | | — | | | 15,245,540 | | | 444,397 | | | 95,355(10) | | | 16,046,702 | | | 2020 | | | 175,000 | | | 78,000 | | | 144,000 | | | — | | | 4,970 | | | 401,970 | | | 2019 | | | 136,250 | | | — | | | 15,000 | | | — | | | 4,232 | | | 155,482 | Benjamin Yi(11)
Executive Chairman
| | | 2021 | | | 484,857(12) | | | — | | | 20,123,600(13) | | | 732,153(14) | | | 5,331(15) | | | 21,345,941 | | | 2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — | William Jackman
General Counsel
| | | 2021 | | | 147,885 | | | — | | | 12,822,179 | | | 230,155 | | | — | | | 13,200,218 | | | 2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2019 | | | — | | | — | | | — | | | — | | | — | | | — |
(1)
| EffectiveAmounts reported in this column reflect the grant date fair value, computed in accordance with FASB ASC Topic 718, of the time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) awards granted to the named executive officer, based on the closing price per share of our Common Stock as of the grant date, as reported on the Nasdaq Capital Market. These amounts do not necessarily correspond to the actual value that may be recognized by the named executive officer, which depends, among other things, on the vesting of the applicable RSUs or PSUs, and the closing price per share of our Common Stock as of settlement of the vested award. Vested RSUs and PSUs are convertible into shares of the Company’s common stock on a one-for-one basis, subject to any net settlement for taxes permitted under the 2019 Equity Plan and as approved by the Compensation Committee. Refer to our Annual Report on Form 10-K, and amendments thereto on Form 10-K/A filed March 16, 2022 and May 2, 2022 respectively for further discussion. |
(2)
| During 2021, the Compensation Committee adopted the Annual Incentive Plan (AIP), as discussed under the heading “Key Elements of Executive Compensation” under Item 11 of our Annual Report on Form 10-K, and amendments thereto on Form 10-K/A filed March 16, 2022 and May 2, 2022 respectively, which awards non-equity incentive compensation to executive officers and eligible employees based on achievement of designated performance targets during the applicable year. AIP performance targets are established annually as a percentage of the named executive officer’s base salary and are awarded based on the named executive officer’s achievement of the performance targets established during the indicated year. |
(3)
| On February 8, 2021, Mr. Les was appointed as Riot’s Chief Executive Officer, and, though he resigned, effective as of February 8, 2021, from all of his positions on each of the Board’s three standing committees, he continues to serve as an executive director on the Board for no additional compensation. |
(4)
| Reflects the following amounts paid to Mr. Les as compensation for services in 2021: (a) $215,538 in cash and 8.958 Bitcoin, with an aggregate fair value of $403,492 (measured as of the quarterly Bitcoin payment date), representing his 2021 base salary as Riot’s Chief Executive Officer of $240,000 cash, plus 10 Bitcoin, prorated based on his February 8, 2021 employment start date; and (b) $12,857 in cash fees paid to him as compensation for his service as an independent director on the Board for the period prior to February 8, 2021. |
(5)
| The 2021 AIP bonus for Mr. Les includes $366,415 in cash and 15.2673 Bitcoin, with an aggregate fair value of $719,548, measured as of December 31, 2021. |
(6)
| Reflects the amounts paid on behalf of Mr. Les in 2021 for medical insurance coverage after his appointment as Riot’s Chief Executive Officer on February 8, 2021, at a total cost of $3,518 in 2021. |
(7)
| Effective February 7, 2021, Mr. McGonegal was appointedtransitioned from being Chief Executive Officer to focus exclusively on his longtime position as our CFO (principal financial and accounting officer)the Company’s Chief Financial Officer pursuant to the FirstSecond Amendment to the Amended and Restated McGonegal Executive Employment Agreement, for a one-year term, at an annual base salary of $360,000, and agreedAgreement. Prior to stepsteeping down, as our CEO in order to focus on his long-standing positionMr. McGonegal had served as the Company’s CFO, as previously reported by the Company on its Current Report on Form 8-K filed with the SEC onChief Executive Officer commencing February 10, 2021. Upon his appointment, Mr. McGonegal was awarded an initial equity award of 20,000 RSUs under the Company’s5, 2019, Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as CFO. Effective February 7, 2020, under an Amended and, Restated Executive Employment Agreement, Mr. McGonegal was awarded an initial equity award of 209,790 RSUs under the Company’s 2019 Equity Plan, valued at $300,000, which are eligible to vest in four equal quarterly installments. Previously, Mr. McGonegal served as both our CEO and CFO, after being appointed as CFO oneffective August 15, 2019, andsimultaneously as CEOits Chief Financial Officer. |
(8)
| Includes the amounts paid to or on February 6, 2019. He had previously served as CFO until February 27, 2018, and thereafter as principal accounting officer until April 30, 2018. Subsequent to April 30, 2018,behalf of Mr. McGonegal servedfor medical insurance at a total cost of $11,162 and $14,478 in a consulting role.2021 and 2020, respectively. The amountsamount included in “All Other Compensation” for 2019 for Mr. McGonegal represent an award of $75,000 in 2019 under his 2019 employment agreement relating to covertaxes due on the gross-upsettlement of income taxes on restricted shares, each subject to vesting over four quarterly periods through February 2020,vested RSUs granted under the 2019 Equity Plan, and the amountsamount paid to or on his behalf for medical insurance at a total cost of $14,478 and $14,191 in 2020 and 2019, respectively.2019. |
| | (2)(9)
| Effective as of April 6, 2021,7, 2022, Ms. Brooks was appointedresigned as COO pursuantRiot’s Chief Operating Officer, and from all other positions with the Company. She agreed to an executive employment agreementstay on for an initial three-year term, at an annual base salarya three-month consulting period ending July 7, 2022, in exchange for certain equity and cash fees as discussed in this Proxy Statement and under Part III, Item 12, of $275,000, as previously reported by the Company on its Currentour Annual Report on Form 8-K filed with the SEC10-K, and amendments thereto on Form 10-K/A, below. Prior to her resignation, Ms. Brooks served as Riot’s Chief Operating Officer, commencing April 7,6, 2021. UponPrior to her appointment as COO,Chief Operating Officer, Ms. Brooks was granted an initial equity award of 6,000 RSUs underhad served as the Company’s 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following her appointment as COO. Ms. Brooks joined Riot in 2018 and has most recently served as its Vice President of Finance, at an annual base salary of $175,000 in 2020Finance. |
(10)
| Includes Ms. Brook’s $90,000 relocation benefit and during 2019 a base salary that increased from $110,00 to $175,000. She also received equity awards of $144,000 and $15,000 RSUs made under the Company’s 2019 Equity Plan in 2020 and 2019, respectively. The amounts included in “All Other Compensation” for Ms. Brooks represent the amounts paid to or on her behalf for medical insurance at a total cost of $5,355, $4,970, and $4,232 in 2021, 2020, and 2019 respectively. |
(11)
| Effective May 24, 2021, Mr. Yi was appointed as Riot’s Executive Chairman, in which role he serves as both Board chair and as an executive officer of the Company. Following his appointment as Executive Chairman, he no longer receives separate compensation for his service as a director on the Board, including as Board chair. |
(12)
| Reflects the following amounts paid to Mr. Yi as compensation for his services in 2021: (a) $144,516 in cash and 6.048 Bitcoin, with an aggregate fair value of $275,664 (measured as of the quarterly Bitcoin payment date), representing his 2021 base salary as Riot’s Executive Chairman of $240,000 cash, plus 10 Bitcoin, prorated based on his May 24, 2021 employment start date; and (b) $64,668 in director fees paid to him as compensation for his service as an independent director on the Board for 2021, prior to his appointment as Executive Chairman on May 24, 2021. |
TABLE OF CONTENTS 25 (13)
| Includes the 10,000 RSUs awarded to Mr. Yi on February 9, 2021 as compensation for his services as an independent director on the Board (prior to his appointment as Executive Chairman on May 24, 2021), as well as the RSUs and PSUs awarded to Mr. Yi as compensation for his services as our Executive Chairman. |
| | (3)(14)
| The “Stock Awards” column represents2021 AIP bonus for Mr. Yi includes $247,036 in cash and 10.293 Bitcoin, with an aggregate fair value of $485,117, measured as of December 31, 2021. |
(15)
| Reflects the amounts paid on behalf of Mr. Yi in 2021 for medical insurance coverage after his appointment as Riot’s Executive Chairman on May 24, 2021, at a total cost of $5,331 in 2021. |
Grants of Plan-Based Awards Table The following table presents, for each of our named executive officers for the year ended December 31, 2021, information concerning each grant of an equity award made during the year ended December 31, 2021. This information supplements the information about these awards set forth in the foregoing Summary Compensation Table. Jason Les
Chief Executive Officer (Principal Executive Officer)
| | | February 8, 2021 | | | RSU | | | — | | | — | | | — | | | 25,000 | | | 819,750 | | | February 8, 2021 | | | AIP(4) | | | 656,650 | | | — | | | — | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | 525,000 | | | 525,000 | | | — | | | 19,335,750 | Jeffrey McGonegal
Chief Financial Officer
(Principal Financial Officer)
| | | February 7, 2021 | | | RSU | | | — | | | — | | | — | | | 20,000 | | | 655,800 | | | February 7, 2021 | | | AIP | | | 360,000 | | | — | | | — | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | 450,000 | | | 450,000 | | | — | | | 16,573,500 | Benjamin Yi
Executive Chairman
| | | February 9, 2021 | | | RSU(5) | | | — | | | — | | | — | | | 10,000 | | | 398,600 | | | May 24, 2021 | | | RSU(6) | | | — | | | — | | | — | | | 15,000 | | | 389,250 | | | May 24, 2021 | | | AIP(7) | | | 432,655 | | | — | | | — | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | 525,000 | | | 525,000 | | | — | | | 19,335,750 | Megan Brooks
Chief Operating Officer
(former)
| | | April 6, 2021 | | | RSU | | | — | | | — | | | — | | | 6,000 | | | 324,600 | | | April 6, 2021 | | | AIP | | | 261,410 | | | — | | | — | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | 400,000 | | | 400,000 | | | — | | | 14,732,000 | | | November 5, 2021 | | | RSU(8) | | | — | | | — | | | — | | | 6,000 | | | 188,940 | William Jackman
General Counsel
| | | July 5, 2021 | | | RSU | | | — | | | — | | | — | | | 10,630 | | | 299,979 | | | July 5, 2021 | | | AIP | | | 147,885 | | | — | | | — | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | 340,000 | | | 340,000 | | | — | | | 12,522,200 |
(1)
| The Compensation Committee grants Non-Equity Incentive Plan Awards to its named executive officers under the AIP on an annual basis pursuant to an employment agreement between the Company and the named executive officer. The target amount for each named executive officer’s AIP award for the year ended December 31, 2021 was set at 100% of the named executive officer’s base salary, based on the Compensation Committee’s evaluation of the named executive officer’s individual performance during the year. There are no minimum award thresholds or maximum award amounts established under the AIP, and individual named executive officers’ AIP bonuses are determined based on the Compensation Committee’s assessment of their achievement of individual performance objectives during the year. See the discussion of the AIP in the Compensation Discussion and Analysis under Item 11 of our Annual Report on Form 10-K, and amendments thereto on Form 10-K/A. |
(2)
| The vesting schedule for each RSU award is set forth in the “Outstanding Equity Awards at 2021 Fiscal Year-End” table below, and the vesting conditions applicable to PSU awards are discussed under the heading “Performance-Based Restricted Stock Unit Plan” under the Compensation Discussion and Analysis section under Item 11 of our Annual Report on Form 10-K, and amendments thereto on Form 10-K/A. |
(3)
| In accordance with SEC requirements, these amounts reflect the aggregate grant date fair value based upon achievement of the target performance goal, excluding the effect of estimated forfeitures. The amounts reported do not reflect compensation actually received by the named executive officers. |
(4)
| Based on Mr. Les’ base salary for restricted stock2021 of $240,000 cash and 10 Bitcoin, prorated as of the start of his employment on February 8, 2021, the 2021 AIP Target amount for Mr. Les was $656,650, consisting of $215,538 cash and 8.958 Bitcoin (or $441,112, based on the average price of one Bitcoin on February 8, 2021). The actual U.S. Dollar amount of the Bitcoin ultimately awarded to Mr. Les under the AIP for 2021 is disclosed in the “Non-Equity Incentive Plan Compensation” column of the foregoing Summary Compensation Table. |
(5)
| On February 9, 2021, Mr. Yi was awarded 10,000 RSUs under the 2019 Equity Plan as compensation for his service as an independent director on the Board for 2021. |
TABLE OF CONTENTS (6)
| On May 24, 2021, Mr. Yi was awarded 15,000 RSUs under the 2019 Equity Plan in connection with his appointment as Executive Chairman, as compensation for services. |
(7)
| Based on Mr. Yi’s base salary for 2021 of $240,000 cash and 10 Bitcoin, prorated as of the start of his employment on February 8, 2021, the 2021 AIP Target amount for Mr. Yi was $432,655, consisting of $209,193 cash and 6.048 Bitcoin (or $234,094, based on the average price of one Bitcoin on May 24, 2021). The actual U.S. Dollar amount of the Bitcoin ultimately awarded to Mr. Yi under the AIP for 2021 is disclosed in the “Non-Equity Incentive Plan Compensation” column of the foregoing Summary Compensation Table. |
(8)
| On November 5, 2021, Ms. Brooks was awarded an additional 6,000 RSUs under the 2019 Equity Plan as compensation for her services as our (former) Chief Operating Officer pursuant to an amendment to her executive employment agreement dated as of that date. These 6,000 RSUs are eligible to vest in four equal quarterly installments following the grant date, commencing January 1, 2022. |
Outstanding Equity Awards at Fiscal Year End Table The following table provides information regarding the outstanding equity awards held by our named executive officers as of December 31, 2021: Jason Les(3)
Chief Executive Officer
(Principal Executive Officer)
| | | February 27, 2020 | | | RSU | | | 288,617 | | | 6,444,818 | | | — | | | — | | | February 8, 2021 | | | RSU | | | 6,250 | | | 139,563 | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | — | | | 475,000 | | | 10,606,750 | Jeffrey McGonegal(4)
Chief Financial Officer
(Principal Financial Officer)
| | | February 7, 2021 | | | RSU | | | 5,000 | | | 111,650 | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | — | | | 406,000 | | | 9,065,980 | Benjamin Yi(5)
Executive Chairman
| | | February 27, 2020 | | | RSU | | | 288,617 | | | 6,444,818 | | | — | | | — | | | May 24, 2021 | | | RSU | | | 7,500 | | | 167,475 | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | — | | | 475,000 | | | 10,606,750 | Megan Brooks(6)
Chief Operating Officer
(Former)
| | | April 6, 2021 | | | RSU | | | 3,000 | | | 66,990 | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | — | | | 360,000 | | | 8,038,800 | | | November 5, 2021
| | | RSU | | | 6,000 | | | 133,980 | | | — | | | — | William Jackman(7)
General Counsel
| | | July 5, 2021 | | | RSU | | | 5,315 | | | 118,684 | | | — | | | — | | | August 12, 2021 | | | PSU | | | — | | | — | | | 304,000 | | | 6,788,320 |
(1)
| All awards were granted under the 2019 Equity Plan pursuant to equity award agreements between the named executive officer and the Company as of the Grant Date shown. RSUs vest upon specified vesting dates (e.g., vesting in arrears following the end of each fiscal quarter completed after the grant date), provided the recipient’s service with the Company has not ceased prior to the vesting date. Unvested PSUs are eligible to vest upon the Company’s achievement of the Performance Objectives specified under the Performance Plan, provided the recipient’s service with the Company has not ceased prior to the date the Compensation Committee certifies the achievement of the Performance Objectives (or a portion thereof) relating to the Target Award. For additional information regarding the Performance Plan, see “Performance-Based Restricted Stock Unit Plan” under Item 11 of our Annual Report on Form 10-K, and amendments thereto on Form 10- K/A. Subject to any provisions relating to accelerated vesting upon a change in control or post-termination, unvested RSUs and PSUs are subject to forfeiture if a separation from service occurs prior to the vesting event. See “Potential Payments Upon Termination or Change in Control” under Item 11 of our Annual Report on Form 10-K, and amendments thereto on Form 10-K/A. |
(2)
| Based on the closing price per share of our Common Stock on December 31, 2021 of $22.33, as reported on the Nasdaq Capital Market. |
(3)
| Mr. Les was appointed our Chief Executive Officer, effective February 8, 2021. Prior to his appointment, he served as an independent director on the Board. The outstanding equity awards as of December 31, 2021 include: (a) 288,617 RSUs granted on February 27, 2020 in connection with Mr. Les’ service as an independent director for the years ended December 31, 2019 and 2020, which vested 100% as of March 31, 2022; (b) 6,250 RSUs, representing the unvested and unconverted portion, as of December 31, 2021, of the 25,000 RSUs awarded on February 8, 2021 pursuant to the executive employment agreement between Riot and Mr. Les dated as of that date, which were eligible to vest in four equal quarterly installments following the grant date; and (c) 475,000 unvested PSUs, representing the unvested and unconverted portion of Mr. Les’ total Target Award of 525,000 PSUs, which were granted on August 12, 2021 pursuant to the Performance Plan established by the Compensation Committee under the Company’s 2019 Equity Plan. The vesting of PSUs is contingent upon Riot’s achievement of Performance Objectives under the Performance Plan, during fiscal years 2020 and 2019, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 (“ASC 718”). See note 12 to our consolidated financial statements reported in the 2020 Annual Reportfinal number of vested PSUs may be less than the Target Award, depending on Form 10-K for detailsthe Company’s future performance. |
(4)
| Includes: (a) 5,000 RSUs representing the unvested and unconverted portion, as of December 31, 2021, of the 20,000 RSUs awarded on February 7, 2021 pursuant to the assumptions usedexecutive employment agreement between Riot and Mr. McGonegal dated as of that date, which are eligible |
TABLE OF CONTENTS to vest in four equal quarterly installments following the grant date; and (b) 406,000 PSUs, representing the unvested and unconverted portion, as of December 31, 2021, of Mr. McGonegal’s total Target Award of 450,000 PSUs, which were granted on August 12, 2021 pursuant to the Performance Plan established by the Compensation Committee under the Company’s 2019 Equity Plan. The vesting of PSUs is contingent upon Riot’s achievement of Performance Objectives under the Performance Plan, and the final number of vested PSUs may be less than the Target Award, depending on the Company’s future performance. (5)
| Includes: (a) 7,500 RSUs, representing the unvested portion, as of December 31, 2021, of the 15,000 RSUs awarded on May 24, 2021 pursuant to determinethe executive employment agreement between Riot and Mr. Yi dated as of that date, which are eligible to vest in four equal quarterly installments following the grant date; and (b) 475,000 PSUs, representing the unvested and unconverted portion, as of December 31, 2021, of Mr. Yi’s total Target Award of 525,000 PSUs, which were granted on August 12, 2021 pursuant to the Performance Plan established by the Compensation Committee under the Company’s 2019 Equity Plan. The vesting of PSUs is contingent upon Riot’s achievement of Performance Objectives under the Performance Plan, and the final number of vested PSUs may be less than the Target Award, depending on the Company’s future performance. |
(6)
| Includes: (a) 3,000 RSUs, representing the unvested portion, as of December 31, 2021, of the 6,000 RSUs awarded on April 6, 2021 pursuant to the executive employment agreement between Riot and Ms. Brooks dated as of that date, which are eligible to vest in four equal quarterly installments following the grant date; (b) 6,000 RSUs, representing the unvested portion, as of December 31, 2021, of the 6,000 RSUs awarded on November 5, 2021 pursuant to the first amendment to the executive employment agreement between Riot and Ms. Brooks dated as of that date, which are eligible to vest in four equal quarterly installments following the grant date, commencing on January 1, 2022; and (c) 360,000 PSUs, representing the unvested and unconverted portion, as of December 31, 2021, of Ms. Brooks’ total Target Award of 400,000 PSUs, which were granted on August 12, 2021 pursuant to the Performance Plan established by the Compensation Committee under the Company’s 2019 Equity Plan. The vesting of PSUs is contingent upon Riot’s achievement of Performance Objectives under the Performance Plan, and the final number of vested PSUs may be less than the Target Award, depending on the Company’s future performance. |
(7)
| Includes: (a) 5,315 RSUs representing the unvested portion, as of December 31, 2021, of the 10,360 RSUs awarded on July 5, 2021 pursuant to the executive employment agreement between Riot and Mr. Jackman dated as of that date, which are eligible to vest in four equal quarterly installments following the grant date; and (b) 304,000 PSUs, representing the unvested and unconverted portion, as of December 31, 2021, of Mr. Jackman’s total Target Award of 340,000 PSUs, which were granted on August 12, 2021 pursuant to the Performance Plan established by the Compensation Committee under the Company’s 2019 Equity Plan. The vesting of PSUs is contingent upon Riot’s achievement of Performance Objectives under the Performance Plan, and the final number of vested PSUs may be less than the Target Award, depending on the Company’s future performance. |
Option Exercises and Stock Vested Table The following table presents, for each of the named executive officers, the number of shares of Riot’s common stock underlying the stock options, PSUs and RSUs which vested during 2021, as well as the aggregate value realized upon the exercise of such vested options and the settlement of such vested of PSUs and RSUs. Jason Les
Chief Executive Officer
(Principal Executive Officer)
| | | RSU | | | — | | | — | | | 18,750 | | | 714,625 | | | PSU | | | — | | | — | | | 50,000 | | | 1,806,418 | Jeffrey McGonegal(3)
Chief Financial Officer
(Principal Financial Officer)
| | | Option | | | 12,000 | | | 294,600 | | | — | | | — | | | RSU | | | — | | | — | | | 67,447 | | | 2,219,003 | | | PSU | | | — | | | — | | | 44,000 | | | 1,589,468 | Benjamin Yi
Executive Chairman
| | | RSU | | | — | | | — | | | 17,500 | | | 581,087 | | | PSU | | | — | | | — | | | 50,000 | | | 1,806,418 | Megan Brooks
Chief Operating Officer
(Former)
| | | RSU | | | — | | | — | | | 32,269 | | | 1,661,878 | | | PSU | | | — | | | — | | | 39,999 | | | 1,445,099 | William Jackman
General Counsel
| | | RSU | | | — | | | — | | | 5,314 | | | 127,615 | | | PSU | | | — | | | — | | | 36,000 | | | 1,300,620 |
(1)
| Calculated by multiplying (i) the fair market value of Riot’s common stock on the restrictedexercise date, which was determined using the closing price on the Nasdaq Capital Market of a share of Riot’s common stock awards. According to ASC 718, the value of Stock Awards is reported as ofon the date of grant basedexercise, minus the stated exercise price, by (ii) the number of shares of common stock acquired upon exercise. |
(2)
| Calculated by multiplying (i) the fair market value of Riot’s common stock on the last reportedvesting date, which was determined using the closing price on the Nasdaq Capital Market of a share of Riot’s common stock on the date prior to the day of vesting, or if such day falls on a weekend or holiday, on the immediately preceding trading day, by (ii) the number of shares of Riot’s common stock underlying the vested RSU or PSU, as appropriate. |
(3)
| On December 6, 2021, Mr. McGonegal exercised vested options to purchase 12,000 shares of Riot’s Common Stock at the exercise price of our securities$4.09 per share, via cashless exercise at the market price of $28.64 per share, the closing price of shares of Riot’s stock on the NASDAQ Capital Market, excluding the effectexercise |
TABLE OF CONTENTS date, resulting in 10,286 shares available for issuance. After net settlement for taxes as permitted under the 2019 Equity Plan and approved by the Compensation Committee, Mr. McGonegal was issued 8,572 shares of Riot’s Common Stock. Such options were award to Mr. McGonegal under the predecessor to the 2019 Equity Plan, which was superseded by the 2019 Equity Plan upon its adoption in 2019. Stock Ownership Requirements We established stock ownership requirements to ensure that our NEOs hold a meaningful equity stake in the Company and, by doing so, link their interests with those of our stockholders. Stock directly or indirectly owned (for example, through a trust), along with unvested RSUs (if any), are included in the calculation of ordinary shares owned for purposes of the ownership requirements. NEOs are expected to meet the ownership requirements within five (5) years of the date upon which the NEO first becomes subject to the requirements. Our NEOs are required to own shares in an amount equal to an applicable target value based on a multiple of annual base salary. Our NEOs are required to meet the requirements by the following ownership requirement dates. Jason Les | | | Chief Executive Officer | | | January 10, 2027 | | | 5x | | | In Progress | Jeffrey McGonegal | | | NEO | | | January 10, 2027 | | | 3x | | | In Progress | Benjamin Yi | | | Executive Chairman | | | January 10, 2027 | | | 5x | | | In Progress | William Jackman | | | NEO | | | January 10, 2027 | | | 3x | | | In Progress |
(1)
| As of possible forfeitures. Recipients of such Stock Awards may, therefore, experience diminution in value of their Stock Awards over time based on fluctuations in the trading price of our securities.June 1, 2022. |
Executive Employment Agreements The Company has entered into employment agreements with, and provides post-employment benefits to, its named executive officers as follows: Benjamin Yi, Executive Chairman On May 24, 2021, we entered into an executive employment agreement with Mr. Yi, pursuant to which he has agreed to serve as our Executive Chairman for a three-year term, which renews for successive one-year terms after the expiration of the initial term. As compensation for his services as our Executive Chairman, Mr. Yi will receive a prorated annual base salary of $240,000 in cash, plus ten Bitcoin, and is eligible to receive additional incentive bonuses under the AIP. The Company pays the cash aspect of Mr. Yi’s base salary in accordance with its regular payroll practices, and the Bitcoin aspect of his base salary is paid out on a quarterly basis as of the end of the quarter (each a “Bitcoin payment date”). Mr. Yi was also granted an equity award of 15,000 restricted stock units under and pursuant to the 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as Executive Chairman. These restricted stock units are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement. As additional compensation for his services as our Executive Chairman, Mr. Yi is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Yi may receive pursuant to his executive employment agreement will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Executive Chairman. During the fiscal year ended December 31, 2020, Mr. Yi served as an independent director on our Board and was not an officer or employee of the Company. As a director, Mr. Yi received equity awards of 227,642 restricted stock units under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vest in intervals and are eligible to be settled in accordance with the Company’s regular compensation procedures. Jason Les, Chief Executive Officer On February 8, 2021, we entered into an executive employment agreement with Mr. Les, pursuant to which he has agreed to serve as our Chief Executive Officer (principal executive officer) for a five-year term, which renews for successive one-year terms after the expiration of the initial term. As compensation for his services as our Chief Executive Officer, Mr. Les will receive a prorated annual base salary of $240,000 in cash, plus ten Bitcoin, and is TABLE OF CONTENTS eligible to receive additional incentive bonuses under the AIP, which will be paid in accordance with the Company’s regular payroll practices, with the Bitcoin aspect of his base salary being on the quarterly Bitcoin payment dates. Mr. Les was also awarded an initial equity award of 25,000 restricted stock units under and pursuant to the 2019 Equity Plan, which are eligible to vest in four equal quarterly installments on the first day following the end of each fiscal quarter following his appointment as Chief Executive Officer. These restricted stock units are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement As additional compensation for his services as our Chief Executive Officer, Mr. Les is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Les may receive pursuant to his executive employment agreement will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Chief Executive Officer. During the fiscal year ended December 31, 2020, Mr. Les served as an independent director on our Board and was not an officer or employee of the Company. As a director, Mr. Les received equity awards of 288,617 restricted stock units under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vest in intervals and are eligible to be settled in accordance with the Company’s regular compensation procedures. Jeffrey McGonegal, Chief Financial Officer On February 8, 2021, we entered into an executive employment agreement with Mr. McGonegal, pursuant to which he has agreed to serve as our Chief Financial Officer (principal financial and accounting officer) for a one-year term to focus on his long-standing position as the Company’s Chief Financial Officer. As our Chief Financial Officer, Mr. McGonegal will be paid an annual base salary of $360,000 and is eligible to receive additional cash incentive bonuses under the AIP, which amounts will be paid in accordance with the Company’s regular payroll practices as compensation for his services as Chief Financial Officer. Upon entry into his current executive employment agreement, Mr. McGonegal was granted an equity award of 20,000 RSUs under the Company’s 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as Chief Financial Officer, and which are convertible into shares of our common stock on a one-for-one basis following vesting. Any equity Mr. McGonegal may receive pursuant to his executive employment agreement will be awarded under the Company’s 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Chief Financial Officer. During the fiscal year ended December 31, 2020, Mr. McGonegal served as our Chief Executive Officer and Chief Financial Officer pursuant to an executive employment agreement, dated as of February 2, 2020, at an annual base salary of $250,000, and was awarded 209,790 RSUs on February 7, 2020 under the Company’s 2019 Equity Plan. Megan Brooks, Chief Operating Officer (former) Effective as of April 6, 2021, we entered into an executive employment agreement with Ms. Brooks, pursuant to which she agreed to serve as our Chief Operating Officer for an initial three-year term, which may be renewed for successive one-year terms after the expiration of the initial term. During the initial three-year term of her employment as our Chief Operating Officer, Ms. Brooks was paid an annual base salary of $275,000 and was eligible to receive additional cash incentive bonuses, which was paid in accordance with the Company’s regular payroll practices as compensation for her services as Chief Operating Officer. Upon her appointment as Chief Operating Officer, Ms. Brooks was granted, as additional compensation for her services as our Chief Operating Officer, an initial equity award of 6,000 RSUs under the Company’s 2019 Equity Plan pursuant to an equity award agreement with the Company, which RSUs were eligible to vest in four equal quarterly installments following her appointment as Chief Operating Officer. These RSUs are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the equity award agreement. As additional compensation for her services as our Chief Operating Officer, Ms. Brooks was also eligible to receive periodic equity awards, which are subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company. Any equity Ms. Brooks received pursuant to her executive employment agreement were awarded under the Company’s 2019 Equity Plan. Prior to her appointment on April 6, 2021 as our Chief Operating Officer, Ms. Brooks served as Riot’s Vice President of Finance, a position to which she had been appointed in fiscal year 2020, at an annual base salary of $175,000, and she received equity awards of 117,073 RSUs under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, all of which were vested as of December 31, 2021. TABLE OF CONTENTS On March 21, 2022, we entered into a Separation and Release Agreement (the “Separation Agreement”) with our Chief Operating Officer, Ms. Brooks, regarding her separation from us, effective as of April 7, 2022 (the “Separation Date”), and her provision of certain transition services to us to help facilitate a smooth transition following the cessation of her employment with us from the Separation Date through July 7, 2022, unless earlier terminated as provided in the Separation Agreement (the “Transition Period”). Under applicable law, the Separation Agreement may be revoked for seven days following its execution; therefore, the Separation Agreement became effective as of March 29, 2022. The Separation Agreement provides for: (i) a customary waiver and release in favor of the Company; (ii) reconfirmation and certain extensions of the obligations under existing agreements pertaining to confidentiality and intellectual property ownership; (iii) the parties’ agreements regarding cooperation following the Separation Date; (iv) the provision of certain transition services to the Company and payment of the transition services fees; and (v) upon the Separation Agreement becoming binding and enforceable by its terms, payment of the following amounts as separation benefits: (A) a cash severance payment of $406,250.00, less amounts withheld for applicable taxes, representing 15 months’ base salary, payable in semi-monthly installments commencing July 7, 2022 according to Riot’s ordinary compensation practices; (B) a lump-sum payment as of the Separation Date of $86,370.00, less amounts withheld for applicable taxes, representing the pro-rated portion of the gross annual Incentive Bonus amount for fiscal year 2022 accrued through the Separation Date; (C) continued vesting through the end of the Transition Period of 6,000 time-based RSUs previously granted under the 2019 Equity Plan pursuant to the RSU award agreements dated as of April 7, 2021 and November 5, 2021, with acceleration of the final 1,500 RSUs awarded under the November 5, 2021 RSU award agreement as of July 7, 2022, as permitted under the 2019 Equity Plan and as approved by the Company’s Compensation Committee; (D) continued vesting through the end of the Transition Period of the performance-based PSUs previously granted under the 2019 Equity Plan pursuant to the PSU award agreement dated as of August 12, 2021, based on the Company’s performance as of the end of Q2 2022 on June 30, 2022; and € if continuing coverage under our group medical plan is elected pursuant to the Consolidated Omnibus Budget Reconciliation Act, as amended, (“COBRA”) payment of COBRA premiums until the earlier of 18 months after the Separation Date or the date such coverage commences under a subsequent employer’s medical insurance plan. Further, in consideration of the transition services, we agreed to pay a cash fee of $81,250.00, payable in semi-monthly installments throughout the Transition Period, and grant 75,000 RSUs under the 2019 Equity Plan, which are eligible to vest in three equal tranches as of May 7, 2022, June 7, 2022, and July 7, 2022. William R. Jackman, General Counsel Effective July 5, 2021, we entered into an executive employment agreement with Mr. Jackman, pursuant to which he has agreed to serve as our General Counsel for a three-year term, which renews for successive one-year terms after the expiration of the initial term. As our General Counsel, Mr. Jackman will receive a prorated annual base salary of $300,000 and is eligible to receive additional incentive bonuses under the AIP, which will be paid in accordance with the Company’s regular payroll practices as compensation for his services as our General Counsel. Mr. Jackman was also granted an equity award of 10,630 time-based RSUs under and pursuant to the 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as General Counsel. These RSUs are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement. As additional compensation for his services as our General Counsel, Mr. Jackman is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Jackman may receive pursuant to his executive employment agreement will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our General Counsel. Securities Authorized for Issuance Under Equity Compensation Plans The Company currently has one equity compensation plan, the 2019 Equity Plan, as amended. On October 19, 2021, the Company’s stockholders approved the Second Amendment, which increased the number of shares of the Company’s common stock reserved for issuance by 4,400,000 shares. The Company currently provides stock-based compensation to employees, directors and consultants under the 2019 Equity Plan, as approved by the Company’s stockholders on October 23, 2019, and on November 12, 2020 with respect to the First Amendment, and on October 19, 2021 with respect to the Second Amendment. The Company’s previous 2017 Stock Incentive Plan, as amended (the “2017 Plan”), was replaced by the 2019 Plan, with the 2017 Plan continuing to govern the then TABLE OF CONTENTS outstanding grants and awards for 12,000 options and 114,103 shares of restricted common stock. No additional grants can be made under the 2017 Plan. The Company has reserved 3,554,111 common shares for issuance under the 2019 Plan. The following table provides information as of December 31, 2021, about the shares of common stock that may be issued upon the vesting of performance and non-performance based restricted common stock under the 2019 Equity Plan: Equity compensation plans approved by security holders | | | 4,182,298 | | | $31.86 | | | 3,554,111 | Equity compensation plans not approved by security holders | | | — | | | — | | | — | Total | | | 4,182,298 | | | $31.86 | | | 3,554,111 |
Equity Compensation Plan Information
The Riot Blockchain, Inc. 2019 Equity Plan, as amended The Company currently has one equity compensation plan, the Riot Blockchain, Inc. 2019 Equity Plan, as approved by the stockholders at the 2019 Annual General Meeting of stockholders, including the First Amendment to the Riot Blockchain, Inc. 2019 Equity Plan, as approved by the stockholders at the 2020 Annual General Meeting of stockholders (collectively, the “2019 Equity Plan”). Under the 2019 Equity Plan, the Company may provide stock-based compensation to employees, directors and consultants. The Company’s previous 2017 Stock Incentive Plan, as amended, (the “2017 Equity Incentive Plan”), was replaced by the 2019 Equity Plan, with the 2017 StockEquity Incentive Plan (the “2017 Equity Incentive Plan”) continuing to govern the then outstanding grants and awards for 12,000 options and 288,603 shares of restricted common stock made under the 2017 Equity Incentive Plan. As of the date of adoption of the 2019 Equity Plan, no additional grants may be made under the 2017 Equity Incentive Plan. As approved by the Company’s stockholders at the 2019 Annual General Meeting, the Company reserved 3,600,000 shares of its common stock for issuance under the 2019 Equity Plan, and, as approved by the Company’s stockholders at the 2020 Annual General Meeting, the number of shares reserved for issuance under the 2019 Equity Plan was increased by 3,500,000 additional shares. As of the date of this Proxy Statement, the Company has granted awards of 3,860,000 restricted stock units and, as discussed under the following section, of performance-based restricted stock units, under the 2019 Equity Plan which are, upon vesting and settlement by the Company, convertible into an equal number of shares of the Company’s common stock.
Performance RSU Plan under the 2019 Equity Plan On August 12, 2021, we adopted a performance-based restricted stock unit performance plan (the “Performance RSU Plan”) for all executive officers and eligible employees of the Company and its consolidated subsidiaries. In connection with the Performance RSU Plan, a form of performance-based restricted stock unit award agreement was approved (the “Performance RSU Award Agreement”) under the 2019 Equity Plan, which are eligible to vest during the performance period ending December 31, 2023 (the “Performance Period”) based upon the Company achieving certain performance goals, as further described below. The Performance RSU Award Agreement provides for the grant of Performance RSU Awards, which generally vest upon the successful completion of specified milestones for each 100 megawatts (“MW”) of added infrastructure capacity, up to a total capacity of 1,500 MW (as described in the Performance RSU Award Agreement) (the “Infrastructure Development Target”). The Performance RSU Award Agreement also provides for the grant of Performance RSU Awards which generally vest if the Company achieves specified thresholds of Adjusted EBITDA (as described in the Performance RSU Award Agreement) (“Adjusted EBITDA”). The vesting and issuance of shares of common stock to the award participant only occurs if the Company achieves specified thresholds of the Infrastructure Development Target and Adjusted EBITDA target during the Performance Period. TABLE OF CONTENTS The exact number of shares issuable pursuant to the Performance RSU Award Agreement depends on level of the Company’s performance against the Infrastructure Development Target and Adjusted EBITDA target, as determined by the Compensation and Human Resources Committee during the Performance Period, and in general can range from 0% to 100% of the target number of Performance RSU Awards, depending on the level of achievement of the Infrastructure Development Target and Adjusted EBITDA targets. If the Infrastructure Development Target or Adjusted EBITDA targetstarget have not been met by the end of the Performance Period, any unvested Performance RSU Awards are forfeited. The foregoing description is subject to, and qualified in its entirety by, the information contained in the Form 8-K, filed August 16, 2021. As of the filing of this Proxy Statement, the Compensation and Human Resources Committee has determined that the performance objectives for a total of 319,026 Performance RSU Awards granted to our officers and employees under the Performance RSU Plan have been achieved; and, therefore, that these 319,026 Performance RSUs have become vested and are eligible to be settled by the Company under the 2019 Equity Plan. The following table provides information as
We believe that to properly motivate and incentivize our executive team in the event of December 31, 2020, abouta change in control and to the sharespossibility of the Company’s common stock that may be issued upon the exercise of optionsa termination without “cause” or the vesting of restricted common stock (including restricted stock unitsa termination with “good reason,” a standardized “double trigger” change in control and other convertible equity rights) under the 2019 Equity Plan:| Plan Category | | Number of securities to be issued upon exercise of outstanding options and restricted common stock | | Weighted average exercise price of outstanding options | | Number of securities remaining available for future issuance | | | | | | | | | | Equity compensation plans approved by security holders(1) | | | 699,203 | | | $ | — | | | | 3,975,369 | | | | | | | | | | | | | | | | | Equity compensation plans not approved by security holders (none) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | Total | | | 699,203 | | | $ | — | | | | 3,975,369 | |
(1) | Consists of 699,203 shares of restricted stock units awarded under the 2019 Equity Plan |
Outstanding Equity Awards at Fiscal Year End
The following table shows the outstanding equity awards held by theseverance policy is critical. We have agreed to provide payments and benefits to our named executive officers and certain other executive officers in the event of a termination without “cause” or by the officer for “good reason” following a change in control transaction. Our Compensation Committee approves all change in control compensation and periodically evaluates the appropriateness of such compensation in light of advice from the Board’s compensation advisers, Meridian, as of December 31, 2020:
| | | | Option Awards | | | Restricted Stock Awards | | Named Executive Officer | | | Number of Securities Underlying Unexercised Options | | | | Option Exercise Price | | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested | | | Market Value of Shares or Units of Stock That Have Not Vested | | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (#) Exercisable | | | | ($) | | | | | | | (#) | | | ($) | | | | (#) | | | | ($) | | | Jeffrey McGonegal (1) | | | 12,000 | | | | 4.09 | | | | 9/9/2023 | | | 52,447 | | | 891,075 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Megan Brooks | | | — | | | | — | | | | — | | | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Includes options to purchase 12,000 common shares at $4.09 per share granted on September 20, 2018 underwell as the Company’s then-effective 2017 equity incentive plan, 100% of which vested at the grant date. As of December 31, 2020, none of these options had been exercised. Also includes 52,447 unvested RSUs, representing the unvested portiondirectors’ evaluation of the 209,790 RSUs granted on February 7, 2020 underCompany, its competitors, and the Company’s 2019 Equity Plan pursuantBitcoin mining industry generally. We believe that these change in control benefits assist to Mr. McGonegal’s employment agreement, at amaximize stockholder value of $1.43 onand maintain our named executive officers’ focus in the date of the award, which RSUs vested pro rata on a quarterly basisperiod prior to, during and after the grant date. Vested RSUs are convertible into shares of the Company’s common stock on a one-for-one basis.
Executive Employment Agreements
The Company has entered into employment agreements with, and provides post-employment benefits to, its named executive officers as follows:
Benjamin Yi, Executive Chairperson
On May 24, 2021, we entered into an executive employment agreement with Mr. Yi, pursuant to which he has agreed to serve as our Executive Chairperson for a three-year term, which renews for successive one-year terms after the expiration of the initial term. As our Executive Chairperson, Mr. Yi will receive a prorated annual base salary of $240,000 in cash, plus ten Bitcoin, and is eligible to receive additional incentive bonuses of up to 100% of his annual base salary, which will be paid in accordance with the Company’s regular payroll practices as compensation for his services as our Executive Chairperson. Mr. Yi was also granted an equity award of 15,000 restricted stock units under and pursuant to the 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as Executive Chairperson. These restricted stock units are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement. As additional compensation for his services as our Executive Chairperson, Mr. Yi is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Yi may receive pursuant to his executive employment agreement will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our Executive Chairperson.
During the fiscal year ended December 31, 2020, Mr. Yi served as an independent director on our Board and was not an officer or employee of the Company. As a director, Mr. Yi received equity awards of 227,642 restricted stock units under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vest in intervals and are eligible to be settled in accordance with the Company’s regular compensation procedures.
Jason Les, Chief Executive Officer
On February 8, 2021, we entered into an executive employment agreement with Mr. Les, pursuant to which he has agreed to serve as our CEO (principal executive officer) for a five-year term, which renews for successive one-year terms after the expiration of the initial term. As CEO, Mr. Les will receive a prorated annual base salary of $240,000 in cash, plus ten Bitcoin, and is eligible to receive additional incentive bonuses up to 100% of his annual base salary, which will be paid in accordance with the Company’s regular payroll practices as compensation for his services as CEO. Mr. Les was also awarded an initial equity award of 25,000 restricted stock units under and pursuant to the 2019 Equity Plan, which are eligible to vest in four equal quarterly installments on the first day following the end of each fiscal quarter following his appointment as CEO. These restricted stock units are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement As additional compensation for his services as our CEO, Mr. Les is also eligible to receive periodic grants of equity awards, including incentive compensation awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. Any equity Mr. Les may receive pursuant to his executive employment agreement will be awarded under the 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our CEO.
During the fiscal year ended December 31, 2020, Mr. Les served as an independent director on our Board and was not an officer or employee of the Company. As a director, Mr. Les received equity awards of 288,617 restricted stock units under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, which vest in intervals and are eligible to be settled in accordance with the Company’s regular compensation procedures.
Jeffrey McGonegal, Chief Financial Officer
On February 8, 2021, we entered into an executive employment agreement with Mr. McGonegal, pursuant to which he has agreed to serve as our CFO (principal financial and accounting officer) for a one-year term to focus on his long-standing position as the Company’s CFO. As our CFO, Mr. McGonegal will be paid an annual base salary of $360,000 and is eligible to receive additional cash incentive bonuses up to 100% of his annual base salary, which amounts will be paid in accordance with the Company’s regular payroll practices as compensation for his services as CFO. Upon entry into his current executive employment agreement, Mr. McGonegal was granted an equity award of 20,000 RSUs under the Company’s 2019 Equity Plan, which are eligible to vest in four equal quarterly installments following his appointment as CFO, and which are convertible into shares of our common stock on a one-for-one basis following vesting. Any equity Mr. McGonegal may receive pursuant to his executive employment agreement will be awarded under the Company’s 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of his employment as our CFO.
During the fiscal year ended December 31, 2020, Mr. McGonegal served as our CEO and CFO pursuant to an executive employment agreement, dated as of February 2, 2020, at an annual base salary of $250,000, and was awarded 209,790 RSUs on February 7, 2020 under the Company’s 2019 Equity Plan, 52,447 of which remained unvested as of the December 31, 2020.
Megan Brooks, Chief Operating Officer
On April 6, 2021, we entered into an executive employment agreement with Ms. Brooks, pursuant to which she has agreed to serve as our COO for an initial three-year term, which may be renewed for successive one-year terms after the expiration of the initial term. During the initial three-year term of her employment as our COO, Ms. Brooks will be paid an annual base salary of $275,000 and is eligible to receive additional cash incentive bonuses up to 100% of her annual base salary, which will be paid in accordance with the Company’s regular payroll practices as compensation for her services as COO. Upon her appointment as COO, Ms. Brooks was granted, as additional compensation for her services as our COO, an initial equity award of 6,000 RSUs pursuant to an equity award agreement with the Company, which RSUs are eligible to vest in four equal quarterly installments following her appointment as COO. As additional compensation for her services as our COO, Ms. Brooks is also eligible to receive periodic grants of equity awards, which will be subject to vesting schedules and other terms and conditions, as set forth in equity award agreements with the Company, to be entered into as of the date of such future awards. These RSUs are convertible into shares of our common stock on a one-for-one basis following vesting, in accordance with the terms of the applicable equity award agreement. Any equity Ms. Brooks may receive pursuant to her executive employment agreement will be awarded under the Company’s 2019 Equity Plan, as the same may be amended or replaced from time to time during the term of her employment as our COO.
During the fiscal year ended December 31, 2020, Ms. Brooks served as Riot’s Vice President of Finance in fiscal year 2020, at an annual base salary of $175,000, and she received equity awards of 117,073 RSUs under the Company’s 2019 Equity Plan, pursuant to an equity award agreement with the Company, all of which were vested as of December 31, 2020.
Potential Post-Employment Benefits The following table discloses the post-employmentpotential payments upon termination payments and benefits, denominatedor change in U.S. Dollars ($),control that would have been received by Mr. Jeffrey McGonegal, our CFO (who was our only named executive officer as of December 31, 2020), and Ms. Megan Brooks, our COO (who served as our Vice President of Finance and was not a named executive during the year ended December 31, 2020),officers, had a termination event occurred on December 31, 2020. Messrs. Yi2021 based on the terms of the applicable employment agreements and Lesequity award agreements that were not executive officers orin effect on that date. The table assumes that any equity awards that vest in connection with the applicable triggering event that are subject to performance conditions are earned at the target level of performance within the applicable period except as may be noted otherwise, employed with us duringand values equity awards based on the year endedclosing price of a share of our common stock on December 31, 2020 and are not included in this table.2021 of $22.33, as reported on the Nasdaq Capital Market. These amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers, which amounts would only be known at the time that he or she becomes entitled to such payment. Jason Les,
Chief Executive Officer Severance Restricted Stock Units Options
| | | — | | | 703,065 | | | 175,766 | | | — | | | 703,065 | | | — | | | 6,444,818 | | | — | | | — | | | 6,444,818 | | | — | | | — | | | — | | | — | | | — | Total | | | — | | | 7,147,882 | | | — | | | — | | | 7,147,882 | Jeffrey McGonegal,
Chief Financial Officer Severance Restricted Stock Units Options
| | | — | | | 180,000 | | | 150,000 | | | — | | | 360,000 | | | — | | | 111,650 | | | 891,075 | | | — | | | 111,650 | | | — | | | — | | | — | | | — | | | — | Total | | | — | | | 291,650 | | | 1,041,075 | | | — | | | 471,650 | Megan Brooks,
Chief Operating Officer (former) Severance Restricted Stock Units Options
| | | — | | | 325,000 | | | 81,250 | | | — | | | 325,000 | | | — | | | 66,990 | | | — | | | — | | | 66,990 | | | — | | | — | | | — | | | — | | | — |
TABLE OF CONTENTS | Named Executive Officer | | Termination of Employment | | Death or Disability | | Change in Control | | Benefit | | (Without Cause or for Good Reason) | | (For Cause) | | | | (Single Trigger) | | (Double Trigger) (4) | | Jeffrey McGonegal (1) | | | | | | | | | | | | | | | | | | | | | | Severance | | | 150,000 | | | | — | | | | 150,000 | | | | 150,000 | | | | 150,000 | | | Equity Compensation (2) | | | 891,075 | | | | — | | | | 891,075 | | | | 891,075 | | | | 891,075 | | | Total | | | 1,041,075 | | | | — | | | | 1,041,075 | | | | 1,041,075 | | | | 1,041,075 | | | | | | | | | | | | | | | | | | | | | | | | | Megan Brooks (3) | | | | | | | | | | | | | | | | | | | | | | Severance | | | — | | | | — | | | | — | | | | — | | | | — | | | Equity Compensation (2) | | | — | | | | — | | | | — | | | | — | | | | — | | | Total | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | — | | | 391,990 | | | — | | | — | | | 391,990 | Benjamin Yi,
Executive Chairman
Severance Restricted Stock Units Options
| | | — | | | 703,065 | | | 175,766 | | | — | | | 703,065 | | | — | | | 5,083,246 | | | — | | | — | | | 5,083,246 | | | — | | | — | | | — | | | — | | | — | Total | | | — | | | 5,786,310 | | | — | | | — | | | 5,786,310 | William Jackman,
General Counsel
Severance Restricted Stock Units Options
| | | — | | | 300,000 | | | 75,000 | | | — | | | 300,000 | | | — | | | 118,684 | | | — | | | — | | | 118,684 | | | — | | | — | | | — | | | — | | | — | Total | | | — | | | 418,684 | | | — | | | — | | | 418,684 |
(1)
| During“Severance” excludes the fiscal year ended December 31, 2020, Mr. McGonegal servedcost of COBRA coverage, as our CEO and CFO and, effectivewell as of February 8, 2021, focused on his longtime position of CFO. Pursuant to his then-effective employment agreement, had the indicated termination event occurred as of December 31, 2020, Mr. McGonegal would have been entitled to receivenamed executive officer’s AIP bonus, because the indicated post-employment termination payments and benefits, including the automatic vestingamount of the unvested portionAIP target bonus granted to the named executive officer is contingent upon the future achievement of any RSU awards he had receivedperformance objectives that cannot be reasonably predicted; further, the named executive officer’s AIP performance target (i.e., the maximum percentage of the named executive officer’s base salary that can be achieved as an AIP bonus for the applicable year) is set each year by the Compensation Committee based on contemporaneous business expectations and conditions, which likewise cannot be reasonably predicted. “Restricted Stock Units” includes time-based restricted stock units (RSUs) granted under and subject to the terms and conditions of the 2019 Equity Plan but excludes performance-based restricted stock units (PSUs) granted pursuant to the performance-based restricted stock unit plan established under the 2019 Equity Plan, that were outstandingbecause the amount and vesting of the PSU awards granted to the named executive officer are contingent upon the Company’s future achievement of performance objectives, the achievement of which cannot be reasonably predicted. |
(2)
| Assumes death or disability as of December 31, 20202021 and maximum bonus payout. |
(3)
| | (2) | Equity Compensation includes awards of restricted stock units, options, andWe have a “Double-Trigger” Change in Control policy that applies to all compensation paid or payable to our named executive officers (and other employees), including any equity compensation awardedpaid or payable under the 2019 Equity Plan. | | | (3) | Ms. Brooks was appointed asPlan, which governs all of our COO, effective as of April 6, 2021, and had previously served as our Vice President of Finance pursuant to an employment agreement with the Company. Pursuant to her former employment agreement, Ms. Brooks was not entitled to severance or other post-employment termination payments and benefits. | | | (4) | Under the Change in Control Policy set forth in our 2019 Equity Plan, upon consummation ofcurrently outstanding equity awards. Accordingly, a Change in Control (as defined in the 2019 Equity Plan) anddoes not automatically trigger any Severance, accelerated vesting of Restricted Stock Units or Options, or any other post-employment benefits without a subsequent qualifying separation from service, diminution in responsibilities, or other “Good Reason” termination event (as defined in the 2019 Equity Plan), any unvested restricted stock units and stock options held. If a Change in Control is followed by a subsequent qualifying separation from service with the period specified under our agreements with the named executive officer (generally six to twelve months following the Change in Control), the vesting of any unvested RSUs held by the named executive officer as of the Change in Control is automatically accelerate and vest uponaccelerated such that the unvested RSUs are deemed to have vested as of immediately prior to the consummation of the applicable Change in Control event. No severance is due to the named executive officer following a Change in Control. This column shows the value of unvested restricted shares of common stock and stock options that would have been received upon acceleration of unvested equity rights as of December 31, 2020. The closing price of the Company’s common stock on December 31, 2020 was $16.99 per share.Control unless a subsequent qualifying separation from service occurs. |
Clawback Policy We believe that it is important to foster and maintain a culture that emphasizes integrity and accountability. For this reason, we enter into executive employment agreements with our named executive officers that provide the Company with the ability to recover certain incentive compensation paid or payable to named executive officer under certain circumstances, such as a material restatement of all or a portion of our financial statements caused by or partially caused by the named executive officer’s misconduct (the “Clawback Policy”). The Clawback Policy generally permits us to require that any current or former named executive officer who is (or was) subject to Section 16 of the Exchange Act repay certain cash-based incentive compensation or performance-based equity compensation to the Company if the Compensation Committee determines that such named executive officer’s misconduct actions caused or partially caused the Company to restate all or a portion of its financial statements within the applicable period from the original filing date of the restated financial statements. If the Compensation Committee determines that any such cash-based incentive compensation or performance-based equity compensation would have been less had they been calculated based on the restated results, and further determines that fraud, gross negligence, or intentional misconduct by any such named executive officer caused or partially caused such restatement, and that it is in our best interests to recover all or a portion of the excess amount of cash-based incentive compensation or performance-based equity compensation received (or to be received) by such named executive officer, the Compensation Committee may seek to recover the difference between the amounts awarded or paid (or to be awarded or paid) and the amounts that would have been awarded or paid based on the restated results. When the SEC adopts final clawback policy rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we will review and may revise our Clawback Policy to the extent required to comply with such rules. TABLE OF CONTENTS Hedging and Pledging Policies Director Compensation
We payhave established an Insider Trading Policy, which applies to all of our non-employeeemployees and directors, and, among other things, prohibits short sales, engaging in transactions in publicly-traded options (such as puts and calls) and other derivative securities relating to our common stock. This prohibition extends to any hedging or similar transaction designed to decrease the risks associated with holding our securities. In addition, our named executive officers are prohibited from pledging any of our securities as collateral for a mixloan and from holding any of our securities in a margin account. Tax and Accounting Considerations Accounting Treatment We recognize a non-cash charge to earnings for accounting purposes for equity awards. We expect that our Compensation Committee will continue to review and consider the accounting impact of equity awards in addition to considering the impact for dilution and overhang when deciding the amounts and terms of equity grants. Deductibility of Executive Compensation The Internal Revenue Code (the “Code”) Section 162(m) may limit the amount that we may deduct from our federal income taxes for compensation paid to certain of our current or former executive officers who qualify as “covered employees” within the meaning of Code Section 162(m) to one million dollars per executive officer per year. While we are mindful of the benefit of the full deductibility of compensation, we believe that we should not be constrained by the requirements of Code Section 162(m) where those requirements would impair our flexibility in compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, we have not adopted a policy that would require that all compensation be deductible, though we do consider the deductibility of compensation when making compensation decisions. We may authorize compensation payments that are not fully tax deductible if we believe that such payments are appropriate to attract and retain executive talent or meet other business objectives. Taxation of Parachute Payments and Deferred Compensation We have no obligation to provide any executive officer, including any named executive officer, with a “gross-up” or other reimbursement payment for any tax liability that they might owe as a result of the application of Section 280G, 4999, or 409A of the Code, however, we may provide additional payments to cover taxes due in connection with the vesting and settlement of RSU and PSU awards, or otherwise provide for net settlement of vested RSUs and PSUs to cover the state and federal taxes due thereon, as permitted under the 2019 Equity Plan and approved by the Compensation Committee. Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control that exceed certain limits prescribed by the Code, and that the employer may forfeit a deduction on the amounts subject to this additional tax. Section 409A of the Code also may impose significant taxes on a service provider in the event that they receive deferred compensation that does not comply with the requirements of Section 409A of the Code. We have structured our compensation arrangements with the intention of complying with or otherwise being exempt from the requirements of Section 409A of the Code. TABLE OF CONTENTS Risk and Analysis of Compensation Plans The Compensation Committee engaged with Meridian to assess and determine whether the design and operation of our compensation policies and practices could encourage executives or employees to take excessive or inappropriate risks that would be reasonably likely to have a material adverse effect on our Company. In assessing our policies and practices, the following factors among others were analyzed: the design; size and scope of our cash and equity incentive programs and program features that mitigate against potential risks, such as payout caps, equity award clawbacks, the quality and mix of performance-based and “at risk” compensation; various policies such as trading, severance, and benefits, and governance. After reviewing the analysis performed by Meridian, we concluded that any potential risks arising from our employee compensation in amounts recommended bypolicies and practices, including our executive compensation programs, are not reasonably likely to have a material adverse effect on our company. CHIEF EXECUTIVE OFFICER PAY RATIO Pursuant to Instruction 7 to Regulation S-K Item 402(u), as the Company ceased to be a smaller reporting company as of December 31, 2021, the Company is not required to provide pay ratio disclosure until after its 2022 fiscal year. Compensation and Human Resources Committee Report This report of the Compensation Committee is required by the SEC and, in consultationaccordance with independent compensation consultants the committee engages from timeSEC’s rules, will not be deemed to time to assessbe part of or incorporated by reference by any general statement incorporating by reference into any filing under the appropriateness of Riot’s Board compensation package. In recommending changesSecurities Act or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and will not otherwise be deemed “soliciting material” or “filed” under either the Securities Act or the Exchange Act. The Compensation Committee oversees the Company’s director compensation package,programs, policies and practices. The Compensation Committee has reviewed and discussed with management the foregoing “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee has recommended to the Board that the foregoing “Compensation Discussion and Analysis” be included in Amendment No. 1 under Part III, Item 11 of the Company’s Annual Report for the year ended December 31, 2021 and the Proxy Statement for the 2022 Annual General Meeting of Stockholders. Respectfully submitted, Compensation and Human Resources Committee reviews market data providedof the
Board of Directors of Riot Blockchain, Inc. | | | Hannah Cho, Chair | | | | Hubert Marleau | | | | Lance D’Ambrosio |
TABLE OF CONTENTS APPROVAL TO AMEND THE RIOT BLOCKCHAIN, INC. ARTICLES OF INCORPORATION Background On May 31, 2022, our Board unanimously approved that, subject to stockholder approval, the Company’s current Articles of Incorporation, as amended to date, be amended in the form attached hereto as Appendix B. The proposed amendment shall increase the number of shares of common stock authorized for issuance thereunder from 170,000,000 shares to 340,000,000 shares and to increase the number of shares of preferred stock authorized for issuance thereunder from 15,000,000 shares to 30,000,000 shares. The text of the proposed amendment is set forth on Appendix B. We encourage you to read Appendix B in its entirety. Why we Propose the Amended Articles Our Board has determined that it would be in the Company’s best interests to increase the number of authorized shares of both common stock and preferred stock in order to provide our Company with the flexibility to pursue all corporate opportunities involving our stock, which may include, among other business purposes, corporate transactions, public or private offerings of our equity securities, and to attract and retain top talent in a highly competitive market. Each additional authorized share of common stock or preferred stock would have the same rights and privileges as each share of our currently authorized common stock or preferred stock. As of our Record Date, 135,347,900 shares of common stock, no par value, were outstanding, leaving 34,652,100 shares of common stock, no par value, available for issuance. At present, excluding our at-the-market offering disclosed on Form 8-K (SEC File Number 333-259212) and Prospectus (SEC File Number 333-259212), our Board has no immediate plans, arrangements, or understandings to issue the additional shares of common stock or preferred stock. However, the Company desires to have the shares available to provide additional future flexibility to use our common stock or preferred stock for business or financial purposes in the future as well as to have sufficient shares to provide appropriate equity incentives to attract and retain top talent. The issuance of additional shares of common stock in the future will have the effect of diluting earnings per share, voting power and common shareholdings of stockholders. It could also have the effect of making it more difficult for a third party to acquire control of our company. The shares will be available for issuance by independentour Board for proper corporate purposes, including but not limited to, acquisitions, financings, and equity compensation consultantsplans. Our management believes the increase in authorized share capital is in the best interests of our Company and considers whetherour stockholders and recommends that the stockholders approve the increase in authorized share capital. We do not believe that any changes in director compensation areof the updates to our Articles of Incorporation proposed will materially change the rights of our stockholders. Vote Required If approved, the amendment to the Company’s Articles of Incorporation will become effective after the Annual Meeting upon the filing of a certificate of amendment with the Secretary of State of the State of Nevada. The Company currently plans to file the certificate of amendment as soon as reasonably practicable after receiving approval of this Proposal No. 4 by its stockholders. The affirmative vote of the holders of a majority of the total number of shares of our common stock outstanding and entitled to vote as of the Record Date will be required to enableapprove this Proposal No. 4. Abstentions and broker non-votes will have the same effect as a vote against this proposal. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT OF THE COMPANY’S ARTICLES OF INCORPORATION SET FORTH IN THIS PROPOSAL 4. TABLE OF CONTENTS APPROVAL OF THE THIRD AMENDMENT TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER BY 10,000,000 Introduction We are seeking stockholder approval of the Third Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan, as amended (the “Third Amendment”) to increase the number of shares of our common stock, no par value per share, reserved for issuance under the 2019 Equity Plan by 10,000,000 shares. If our stockholders approve the Third Amendment, it will become effective on the date of such stockholder approval. If our stockholders do not approve the Third Amendment, we will only grant awards under the 2019 Equity Plan until the shares available for issuance thereunder are exhausted. On the recommendation of our Compensation Committee, our Board unanimously approved the Third Amendment on May 31, 2022, subject to its approval by our stockholders at the Annual Meeting. The Third Amendment is intended to supplement the 2019 Equity Plan by increasing the number of shares available for issuance under the 2019 Equity Plan to our non-employee independent directors, officers, employees, personnel, and other eligible plan participants. A summary of the Third Amendment appears below under the heading “Summary Description of the Third Amendment” and a copy of the Third Amendment is attached as Appendix C to this Proxy Statement. We encourage you to read Appendix C in its entirety. As authorized by the Board and approved by our stockholders at the 2019 Annual General Meeting, we have registered the issuance of the 3,600,000 shares of our common stock authorized by the 2019 Equity Plan by our Registration Statement on Form S-8, filed with the SEC (SEC File Number 333-235355). At the 2020 Annual General Meeting, our stockholders authorized the reservation of an additional 3,500,000 shares for issuance under the 2019 Equity Plan pursuant to the First Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan (the “First Amendment”) and at the 2021 Annual General Meeting, our stockholders authorized the reservation of an additional 4,400,000 shares for issuance under the 2019 Equity Plan pursuant to the Second Amendment to the Riot Blockchain, Inc. 2019 Equity Incentive Plan (the “Second Amendment”). We have registered the issuance of the 7,900,000 shares of our common stock authorized by the First Amendment and the Second Amendment on Form S-8, filed with the SEC (SEC File Number 333-261086). We believe the Third Amendment, if approved by our stockholders, will provide us with a sufficient number of shares available for issuance under the 2019 Equity Plan to continue to provide a range of equity incentive tools and sufficient flexibility to permit us to make effective use of the share-based awards our stockholders authorize for incentive purposes. Rationale for Amending the 2019 Equity Plan as Proposed We are asking stockholders to approve the Third Amendment to increase the number of shares available for issuance under the 2019 Equity Plan by 10,000,000 additional shares to ensure we can continue to provide equity grants across our organization to employees and non-employee directors once the current share reserve is exhausted under the 2019 Equity Plan for the reasons stated below. We believe that a comprehensive equity incentive compensation program serves as a necessary and significant tool to attract and retain executive officers, employees and non-employee directors in our highly competitive industry. Further, we believe equity awards, including performance equity awards, provide a strong incentive to our directors, officers, and employees to contribute materially to the growth of the Company to retain talented Board members, who, as membersby better aligning their interests with those of our stockholders. Following the adoption of the Board,2019 Equity Plan, as amended, we made regular awards of RSUs to our directors, officers, and employees pursuant to the 2019 Equity Plan. In 2021 and 2022, we have been engaged in a significant period of growth as an organization, culminating in our May 2021 acquisition of our wholly owned subsidiary, Whinstone US, Inc., and its more substantial employee base. In connection with this growth, we made additional awards of RSUs to our employees, officers, and directors, including those of Whinstone under the 2019 Equity Plan, further drawing down the number of shares reserved for issuance under the 2019 Equity Plan. Additionally, the Compensation Committee, in consultation with our outside compensation advisors, established a Performance RSU Plan under the 2019 Equity Plan in August of 2021 to better align the interests of our executive officers and employees with those of our stockholders. In connection with the adoption of the Performance RSU Plan, the TABLE OF CONTENTS Compensation Committee granted a number of Performance RSU awards under the 2019 Equity Plan which are responsiblecontingent upon the Company attaining certain specified performance objectives during the three-year performance period. Please refer to the section of this Proxy Statement entitled “Equity Compensation Plan Information” on page 38 of this Proxy Statement for settinga more complete description of the Performance RSU Plan. Without increasing the number of shares available for issuance under the 2019 Equity Plan, once the current reserve of shares is exhausted, we will not be able to continue to offer competitive levels of equity compensation to attract and retain qualified personnel to continue supporting our growth. As a result, the Company may need to make significant changes to its compensation practices that would limit its flexibility to provide competitive compensation and thus its ability to attract, motivate and retain highly qualified personnel for positions of substantial responsibility with the Company. The Compensation Committee, in consultation with the Company’s strategic vision, overseeingoutside compensation advisors and based on an analysis of the Company’s historic equity compensation share usage, its growthanticipated future equity compensation needs, and development,its assumptions regarding market conditions and protectingcompensation, recommended an additional 10,000,000 shares be made available for issuance under the 2019 Equity Plan. We believe, based on our current rate of share issuance pursuant to the 2019 Equity Plan and our expectations regarding our future equity compensation needs, and barring any significant changes to our projections, that our current request to increase the share reserve under the 2019 Equity Plan by 10,000,000 shares should enable us to continue to make competitive grants of equity compensation in the current market conditions. These projections are subject to change pursuant to the discretion of the Compensation Committee, as administrator of the 2019 Equity Plan, who may determine, based on future events and market conditions, to alter the Company’s equity compensation strategy or projections. Description of the Third Amendment The sole aspect of the 2019 Equity Plan to be amended by the proposed Third Amendment is to increase the number of shares reserved for issuance under the 2019 Equity Plan by 10,000,000 shares. No other provisions of the 2019 Equity Plan are modified, amended, revised, or otherwise changed by this proposed Third Amendment. The specific terms of the 2019 Equity Plan, such as who is eligible to receive awards under the 2019 Equity Plan, the terms of awards, such as vesting periods, the exercise price of any options, and any expiration of these awards, as well as the tax consequences of the awards which may be made under the 2019 Equity Plan, are set forth in the 2019 Equity Plan, as approved by the Company’s stockholders on October 23, 2019 and filed with the SEC on December 5, 2019 as Exhibit 4.5 to our Registration Statement on Form S-8 (SEC File Number 333-235355). All employees and non-employee directors of the Company and its stockholders’ interests.Directorconsolidated subsidiaries will be eligible to participate under the 2019 Equity Plan. All Riot employees, including our current Chief Executive Officer and three (3) non-employee directors, as well as independent contractors and service providers performing services for the Company, could be eligible to participate in the new 2019 Equity Plan immediately after its Effective Date. Any number of the Company’s current employees and future employees, including future named executive officers, as well as future non-employee directors, could be eligible to participate in the new 2019 Equity Plan.
The number of shares that will ultimately be issued from the shares reserved for issuance under the 2019 Equity Plan, as amended by the proposed Third Amendment is subject to the discretion of the Compensation TableCommittee and, therefore, cannot be determined with certainty at this time. However, the Company anticipates that the Compensation Committee will continue in future years to make annual cash and equity awards as described above. This summary does not purport to be a complete description of all the terms of the Third Amendment and is qualified in its entirety by reference to the complete text of the Third Amendment, which is attached to this Proxy Statement as Appendix C. Further, this summary does not purport to be a complete description of the 2019 Equity Plan and is qualified entirely by reference to the full text of the 2019 Equity Plan, as filed with the SEC on December 5, 2019 as Exhibit 4.5 to our Registration Statement on Form S-8 (SEC File Number 333-235355). To the extent there is a conflict between this summary and the actual terms of the 2019 Equity Plan, as amended, the actual terms of the 2019 Equity Plan, as amended, will govern. TABLE OF CONTENTS
Vote Required The following table showsaffirmative vote of a majority of the total compensation, denominatedvotes cast on this Proposal No. 5 will be required to approve the Third Amendment (i.e., the number of “FOR” votes must exceed the number of “AGAINST” votes for this proposal to be approved). Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in U.S. Dollars, paidstreet name for the adoption of equity incentive plans. As a result, any shares not voted by a beneficial owner will be treated as a broker non-vote. Broker non-votes and abstentions will not be counted as votes cast “FOR” or accrued to each“AGAINST” the approval of our directors, currentthe Third Amendment and former, for services as director, duringwill have no effect on the year ended December 31, 2020:outcome of the vote. BOARD VOTING RECOMMENDATION REGARDING PROPOSAL NO. 5 THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE THIRD AMENDMENT TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE BY SELECTING “AGAINST” OR “ABSTAIN” ON THE PROXY. | Name | | Fees Earned or Paid in Cash | | Stock Awards (7) | | All Other Compensation | | Total | | | | | | | | | | | | Benjamin Yi(1) | | | 100,500 | | | | 280,000 | | | | — | | | | 380,500 | | | | | | | | | | | | | | | | | | | | | Jason Les(2) | | | 98,000 | | | | 355,000 | | | | — | | | | 453,000 | | | | | | | | | | | | | | | | | | | | | Hubert Marleau(3) | | | 6,867 | | | | — | | | | — | | | | 6,867 | | | | | | | | | | | | | | | | | | | | | Hannah Cho(4) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | Lance D’Ambrosio(5) | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | Remo Mancini (former)(6) | | | 179,067 | | | | 579,999 | | | | — | | | | 759,066 | |
(1) | Mr. Yi currently serves as the Executive Chairperson of the Board. Stock Awards includes 227,642 RSUs granted on February 27, 2020 under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Mr. Yi and the Company, as amended, as compensation for Mr. Yi’s service as a director for the fiscal year ended December 31, 2020. Pursuant to the equity award agreement, these 227,642 RSUs are eligible to vest on February 15, 2022 and, upon vesting and settlement by the Company, are convertible into shares of our common stock, on a one-for-one basis. | | | (2) | Mr. Les currently serves as our CEO and as a non-independent executive director. Mr. Les does not receive additional compensation as a non-independent director on our Board. Additional information regarding his compensation is disclosed under the heading “Executive Compensation” above. Prior to his appointment as CEO, effective as of February 8, 2021, Mr. Les served as an independent director on our Board. Stock Awards includes 288,617 RSUs granted on February 27, 2020 under the Company’s 2019 Equity Plan pursuant to an equity award agreement between Mr. Les and the Company, as amended, as compensation for Mr. Les’ service as a director for the fiscal year ended December 31, 2020. Pursuant to the equity award agreement, these 288,617 RSUs are eligible to vest on February 15, 2022 and, upon vesting and settlement by the Company, are convertible into shares of our common stock, on a one-for-one basis. | | | (3) | Mr. Marleau currently serves as an independent director on our Board and as chairperson of its Governance and Nominating Committee. Mr. Marleau was appointed to the Board on November 17, 2020 to fill the vacancy created by Mr. Mancini’s retirement from the Board, effective as of that date. Mr. Marleau received cash fees in December 2020 as compensation for his services as a director; however, he did not receive equity compensation for his service as a director during the fiscal year ended December 31, 2020. | | | (4) | Ms. Cho currently serves as an independent director on our Board and as Chairperson of its Compensation and Human Resources Committee. Ms. Cho was appointed to the Board in February 2021 to fill a vacancy on the Board. Ms. Cho did not receive any compensation from the Company during fiscal year 2020. |
TABLE OF CONTENTS CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS | | (5) | Mr. D’Ambrosio currently serves as an independent director on our Board and as Chairperson of its Audit Committee. Mr. D’Ambrosio was appointed to the Board in May 2021 to fill a vacancy on the Board. Mr. D’Ambrosio did not receive any compensation from the Company during fiscal year 2020. | | | (6) | Mr. Mancini resigned from our Board of Directors and from each of the Board committees on which he served, effective as of November 16, 2020. Mr. Mancini’s resignation was not related to any dispute or disagreement relating to the Company’s operations, policies or procedures. During the fiscal year ended December 31, 2020, Mr. Mancini received the indicated fees and Stock Awards as compensation as an independent director and as chairperson of the Board, as well as of its Governance and Nominating and Audit Committees. Stock Awards includes 471,544 RSUs granted on February 27, 2020 under the Company’s 2019 Equity Plan. As of December 31, 2020, all 471,544 of these RSUs had vested and converted into shares of the Company’s common stock, on a one-for-one basis. | | | (7) | The “Stock Awards” column reflects the aggregate grant date fair value for RSU awards granted during the fiscal year ended December 31, 2020, computed in accordance with FASB ASC Topic 718. See note 12 to our consolidated financial statements included in our 2020 Annual Report on Form 10-K, as amended on Form 10-K/A, for details as to the assumptions used to determine the grant date fair value of the restricted stock awards. |
Certain Relationships and Related-PARTY Transactions
The Audit Committee has responsibility for reviewing and, if appropriate, for approving any related-partyrelated party transactions that would be required to be disclosed pursuant to applicable SEC rules. This includes current or proposed transactions in which: (i) we werewhich the Company was or areis to be a participant; (ii)participant in which the amount involved exceeds the lower of either $120,000 or one percent (1%)1% of the average of ourthe Company’s total assets at year-end for the last two completed fiscal years;years, and (iii)in which any of our namedthe Company’s executive officers, directors,Directors, or greaterstockholders (or groups of stockholders) owning more than five percent (5%) beneficial owners5% of our capitalthe Company’s outstanding common stock, or any immediate family members of their immediate families,such persons (collectively a “Related Party”), has a direct or indirect material interest. Apart fromOur Audit Committee reviews and approves any transaction with a Related Party we propose to enter into. Our Audit Committee charter details the policies and procedures relating to transactions disclosed herein, nothat may present actual, potential, or perceived conflicts of interest and may raise questions as to whether such transaction was entered intotransactions are consistent with any director or named executive officers during the last fiscal year.best interest of our company and our stockholders. Such transactions will be entered into only if found to be in the best interest of the Company and approved in accordance with the Company’s Code of Ethics. Except forEthics, which is available on the employment“Investors” page of Company’s website, www.riotblockchain.com, under the “Governance” tab.
Since the beginning of the Company’s last fiscal year, no transactions with a Related Party were approved by the Audit Committee. Other than the compensation arrangements described under the section entitled “Executive Compensation Tables” herein, and standard indemnification agreements previously entered into between us and certain of our named executive officers, since January 1, 2020, none ofwith our directors and officers, there were no transactions with a Related Party in which a Related Party had or named executive officers, nor any person who owned of record or was known to own beneficially more than 5% of the outstanding shares of our common stock, nor any associate or affiliate of such persons or companies, has any material interest,will have a direct or indirect material interest in any transaction, or in any proposed transaction, which has materially affected or will affect us.the Company. TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, asshows beneficial ownership of the Record Date, September 9, 2021, based on 95,951,269 shares of our common stock, no par value per share, issued and outstanding as of the Record Date, with respect to the beneficial ownership of the outstanding shares of our common stock by: (i) any person known to us to beneficially own five percent (5%) or more of our shares outstanding; (ii) each of the Company’s named executive officers and directors; and (iii) the Company’s directors and executive officers as a group. Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act, of 1934, as amended. In computing the number of shares beneficially owned by a person or a group and the percentage ownership, of that person or group, shares of our common stock that the owner has the right to acquire within sixty (60) days after the Record Date are deemed outstanding but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned and their addresses are c/o: Riot Blockchain, Inc., 202 6th3855 Ambrosia Street, Suite 401,301, Castle Rock, CO 80104.31 Colorado 80109.5% stockholders
| | | | | | | The Vanguard Group, Inc.(2) | | | 10,040,038 | | | 7.42% | Directors and Named Executive Officers
| | | | | | | Hannah Cho(3) | | | 12,500 | | | * | Hubert Marleau(4) | | | 6,250 | | | * | Lance D’Ambrosio(5) | | | 13,750 | | | * | Benjamin Yi (6) | | | 224,696 | | | * | Jason Les(7) | | | 468,461 | | | * | Jeffrey McGonegal (8) | | | 337,533 | | | * | Megan Brooks (9) | | | 184,662 | | | * | William Jackman(10) | | | 82,761 | | | | All Directors and Executive Officers as a group (8 persons)(11) | | | 1,330,613 | | | 0.98% |
|
| Name of Beneficial Owner | | Number of Shares Beneficially Owned | | Percentage of Shares Beneficially Owned | | 5% stockholders | | | | Northern Data AG (1) | | | | | | | 6,949,992 | (2) | | 7.2% | | Directors and Named Executive Officers | | | | | | | | | | Hannah Cho | | | | | | | 10,000 | (3) | | * | | Hubert Marleau | | | | | | | 10,000 | (4) | | * | | Lance D’Ambrosio | | | | | | | 7,500 | (5) | | * | | Benjamin Yi (6) | | | | | | | 73,167 | (7) | | * | | Jason Les (8) | | | | | | | 291,944 | (9) | | * | | Jeffrey McGonegal (10) | | | | | | | 358,034 | (11) | | * | | Megan Brooks (12) | | | | | | | 80,795 | (13) | | * | | All Directors and Executive Officers as a group (7 persons) | | | | | | | 831,440 | (14) | | * |
(1)
| Northern Data AG, An der Welle 3, 60322 Frankfurt am Main, Germany. | (2) | ConsistsPercentage of class beneficially owned is based on 135,347,900 shares outstanding as of May 31, 2022. Each share is entitled to one vote. Shares issuable pursuant to RSUs and PSUs vesting within 60 days of May 31, 2022 are deemed outstanding for the purpose of computing the percentage ownership of the remaining 6,949,992 sharesperson holding such options, RSUs and/or PSUs, but are not deemed outstanding for computing the percentage of the 11,800,000 shares of common stock issued to Northern Data AGany other person or group. |
(2)
| Based solely on May 26, 2021, as partial consideration for our acquisition of our wholly owned subsidiary, Whinstone US,information reported by The Vanguard Group, Inc., a Delaware corporation, which was completed effective as of the date of issuance. According to (“Vanguard”) on the Schedule 13G filed by Northern Data AGwith the SEC on September 7, 2021, Northern Data AG hadFebruary 10, 2022, and reporting ownership as of December 31, 2021. Vanguard has sole voting power over 6,949,9920 shares, of common stock.shared voting power over 168,822 shares, sole dispositive power over 9,793,878 shares and shared dispositive power over 246,160 shares. |
(3)
| Includes (a) 6,250 shares held of record as of May 31, 2022 by Ms. Cho; (b) 3,125 shares underlying an equal number of vested RSUs, vested and unconverted; and (c) 3,125 shares underlying an equal number of vested RSUs subject to vest within 60 days of May 31, 2022. |
(4)
| Consists of 10,000(a) 0 shares held of common stock issuablerecord as of May 31, 2022 by Mr. Marleau; (b) 3,125 shares underlying an equal number of vested RSUs, vested and unconverted; and (c) 3,125 shares underlying an equal number of vested RSUs subject to vest within sixty (60)60 days of the Record Date upon the settlement of 10,000 vested restricted stock units granted to Ms. Cho under the 2019 Equity Plan.May 31, 2022. |
(4)(5)
| Consists of 10,000a) 2,500 shares held of common stock issuablerecord as of May 31, 2022 by Mr. D’Ambrosio; (b) 8,125 shares underlying an equal number of RSUs, vested and unconverted; and (c) 3,125 shares representing unvested RSUs that are expected to vest within sixty (60)60 days of the Record Date upon the settlement of 10,000 vested restricted stock units granted to Mr. Marleau under the 2019 Equity Plan.May 31, 2022. |
(5)(6)
| Consists of 7,500(a) 190,946 shares held of common stock issuable within sixty (60) daysrecord as of the Record Date upon the settlementMay 31, 2022 by Mr. Yi; (b) 3,750 shares underlying an equal number of 7,500RSUs, vested restricted stock units granted to Mr. D’Ambrosio under the 2019 Equity Plan.and unconverted; and (c) 30,000 shares underlying an equal number of PSUs, vested and unconverted. | (6) | Mr. Yi, who has served on our Board since 2018, was appointed to serve as our Executive Chairperson, effective May 24, 2021. Mr. Yi continues to serve as Chairperson of our Board of Directors as an executive director. |
(7)
| Consists of 16,500(a) 438,461 shares held of common stock heldrecord as of May 31, 2022 by Mr. Yi, as well as 56,667 shares of common stock issuable within sixty (60) daysJason M. Les, Trustee of the Record Date upon the settlementJason M. Les Trust, dated March 8, 2021; and (b) 30,000 shares underlying an equal number of 15,000PSUs, vested restricted stock units and 41,667 vested performance restricted stock units granted to Mr. Yi under the 2019 Equity Plan.unconverted. |
| (8) | Mr. Les, who has served on our Board since 2017, was appointed to serve as our Chief Executive Officer, effective February 8, 2021. Mr. Les continues to serve as a member of our Board of Directors as an executive director. | (9)
| Consists of 237,777337,533 shares held of common stock heldrecord as of May 31, 2022 by Mr. Les,McGonegal. |
(9)
| Ms. Brooks resigned as wellRiot’s Chief Operating Officer and from all other positions with the Company, effective as 54,167of April 7, 2022. Her beneficial ownership of Riot’s securities for purposes of this table includes: (a) 133,162 shares held of common stock issuablerecord as of May 31, 2022 by Ms. Brooks; (b) 1,500 shares underlying an equal number of unvested RSUs that are expected to vest within sixty (60)60 days of the Record Date upon the settlementMay 31, 2022; (c) 50,000 shares underlying an equal number of 12,500 vested restricted stock units and 41,667 vested performance restricted stock units grantedunvested RSUs, that are expected to Mr. Les under the 2019 Equity Plan. | (10) | Effective February 8, 2021, Mr. McGonegal returned to his longtime position as our Chief Financial Officer after serving as our Chief Executive Officer and Chief Financial Officer for the latter half of 2019 and all of 2020. | (11) | Consists of: (i) 299,304 shares of common stock held by Mr. McGonegal, personally; (ii) 63 shares of common stock held in Mr. McGonegal’s IRA; (iii) 46,667 shares of common stock issuablevest within sixty (60)60 days of May 31, 2022, pursuant to the Record Date upon the settlement of 10,000 vested restricted stock unitsSeparation and 36,667 vested performance restricted stock units granted to Mr. McGonegal under the 2019 Equity Plan; and (iv) 12,000 shares of common stock issuable within sixty (60) days of the Record Date under the 2019 Equity Plan upon settlement of 12,000 fully vested stock options granted to Mr. McGonegal under the Company’s former 2017 Equity Incentive Plan, which are exercisable at an exercise price of $4.09 per share. Release Agreement. |
(12) | Effective April 6, 2021, Ms. Brooks was appointed as our Chief Operating Officer. | (13)(10)
| Consists of 44,462(a) 24,789 shares held of common stock heldrecord as of May 31, 2022 by Ms. Brooks, as well as 36,333Mr. Jackman; (b) 5,315 shares underlying an equal number of common stock issuableRSUs, vested and unconverted; (c) 2,657 shares representing the unvested RSUs that are expected to vest within sixty (60)60 days of the Record Date upon the settlementMay 31, 2022; and (d) 50,000 shares underlying an equal number of 3,000PSUs, vested restricted stock units and 33,333 vested performance restricted stock units granted to Ms. Brooks under the 2019 Equity Plan.unconverted. |
(14)(11)
| Includes each of the items noted in footnotes (3), (4), (5), (6), (7), (9), (11), and (13)(10), above. |
TABLE OF CONTENTS As of the date of this Proxy Statement, the Board knows of no other business that will be presented at the Annual Meeting. Pursuant to Exchange Act Rule 14a-8 and as stated in our 20202021 proxy materials, stockholder proposals intended for consideration for inclusion in this Proxy Statement were due on or before June 16, 2021.May 24, 2022. No stockholder proposals were received by this stated deadline and, therefore, no stockholder proposals have been included in this Proxy Statement. Additionally, as disclosed in our 20202021 proxy materials and as specified in our Bylaws, notice of stockholder proposals to be considered for presentation at this year’s Annual Meeting, but not to be included in this Proxy Statement, were required to have been received by the Company’s Corporate Secretary no sooner than Friday, July 15, 2022 and no later than Tuesday, August 31, 2021. No15, 2022. As the date of our Annual Meeting has been changed by more than thirty (30) days before the first anniversary of the 2021 Annual General Meeting, any stockholder proposals must be submitted no later than ten (10) days after public announcement of this Annual Meeting, this Thursday, June 16, 2022. [No notices of stockholder proposals were received by the Company by this August 31, 2021Thursday, June 16, 2022 deadline and, therefore, no stockholder proposals are eligible to be presented at this year’s Annual Meeting. ] Please see the section of this Proxy Statement entitled, “ When are stockholder proposals due for next year’s annual meeting?” on page 7 above for instructions on how to provide notice of stockholder proposals to be considered for inclusion in our 20222023 proxy statement or to be presented at our 2022 annual stockholders’ meeting,2023 Annual Meeting, as required by our Bylaws and pursuant to Exchange Act Rule 14a-8. DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTS APPENDIX A
SECOND AMENDMENT
TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN
This Second Amendment (this “Second Amendment”) to
Section 16(a) of the Riot Blockchain, Inc. 2019 Equity Plan,Exchange Act, as amended, (the “Plan”), as adopted by the unanimous approvalrequires our directors and certain officers, and persons who beneficially own more than 10% of the membersCompany’s ordinary shares, to file reports of ownership and reports of changes in ownership with the SEC. To our knowledge, based solely on our review of the Boardcopies of Directors (the “Board”)Section 16(a) reports and amendments thereto furnished to us during and with respect to fiscal year 2021 and on written representations from certain reporting persons, all reportable transactions during fiscal year 2021 were reported on a timely basis. INCORPORATION BY REFERENCE To the extent that this Proxy Statement is incorporated by reference into any other filing by us under the Securities Act, as amended, or the Exchange Act, the sections of Riot Blockchain, Inc. (the “Company”) upon the recommendationthis Proxy Statement entitled “Report of the Compensation and Human Resources CommitteeCommittee” and “Report of the Board (the “Committee”), amendsAudit Committee” (to the Plan as set forth herein, effective asextent permitted by the rules of the date ratifiedSEC) will not be deemed incorporated, unless specifically provided otherwise in that other filing. Information contained on, or accessible through, our websites is not a part of this Proxy Statement and approvedis not deemed incorporated by reference hereunder for any purpose. TABLE OF CONTENTS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This proxy statement contains forward-looking statements within the stockholdersmeaning of Section 27A of the Company set forthSecurities Act and Section 21E of the Exchange Act, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this proxy statement include, but are not limited to, statements about Riot’s future financial and operating performance, expectations regarding its strategies, product, and business plans, including its revenue and operational priorities, product initiatives, and product experiments; strategies for improving safety and expectations regarding the application of its abuse rules. The board of directors does not know of any other matters to be presented at the end of this document (the “Effective Date”). Capitalized terms not otherwise defined herein shall haveAnnual Meeting. If any additional matters are properly presented at the meanings ascribed to themAnnual Meeting, the persons named in the Plan.WHEREAS,enclosed proxy card will have discretion to vote the Plan, as adopted byshares of our common stock they represent in accordance with their own judgment on such matters.
It is important that your shares of our common stock be represented at the Committee and the Board, and as ratified and approved by the shareholders effective October 23, 2019, was adopted as the equity compensation planAnnual Meeting, regardless of the Company to promote the success of the Company and to increase shareholder value by providing an additional means through the grant of Awards to attract, motivate, retain and reward selected employees and other eligible persons; andWHEREAS, the First Amendment to the Plan (the “First Amendment”) was adopted by the Company and became effective as ratified and approved by the shareholders on November 12, 2020, to increase the number of shares of Common Stock available for issuance underthat you hold. You are, therefore, urged to vote by telephone or by using the Plan (the “Share Reserve”) by 3,500,000 additional shares of Common Stock;Internet as instructed on the enclosed proxy card or execute and
WHEREAS, return, at your earliest convenience, the Committee, both in its capacity as Plan Administrator and in furtherance of its responsibility to oversee the compensation and equity incentive practices, plans, and procedures of the Company, has been tasked with the oversight and administration of the Plan; and
WHEREAS, the Committee having considered the Company’s issuance of the Awards since the shareholders adopted the Plan, as amended, the Company’s expected needs for equity compensation through December 31, 2024, and the shares of Common Stock available for issuanceenclosed proxy card in the Share Reserve,envelope that has determined to adopt this Second Amendment to the Plan to increase the number of shares of Common Stock available for issuance under the Plan by 4,400,000 additional shares of Common Stock; and
NOW, THEREFORE, as approved by the Board upon the recommendation of the Committee as of September 14, 2021 and as approved by the shareholders of the Company as of the date listed below, this Second Amendment to the Plan is hereby adopted and approved in all respects. Accordingly, pursuant to this Second Amendment, the Plan is hereby amended as follows:
1. As of the Effective Date, Section 4.2 of the Plan is hereby amended by deleting it in its entirety and is replaced with the following:
“4.2 Share Limit. The maximum number of shares of Common Stock that may be delivered pursuant to Awards granted to Eligible Persons under this Plan may not exceed 11,500,000 (the “Share Limit”). Such shares of Common Stock may be authorized and unissued shares or, to the extent permitted by applicable law, issued shares of Common Stock that havealso been reacquired by the Company. Such shares of Common Stock may be used for any type of Award under the Plan, and any or all of the shares of Common Stock up to the Share Limit may be allocated to Incentive Stock Options. Solely for the purpose of determining the number of shares of Common Stock available for Awards under this Section 4.2, the number of shares of Common Stock available for issuance under the Plan shall be reduced by one (1.00) share of Common Stock for every one (1.00) share of Common Stock granted in respect of an Award; provided, however, that in the case of an Award that provides for a range of potential payouts of shares of Common Stock, the number of shares of Common Stock available for issuance under the Plan shall be reduced by the maximum number of shares of Common Stock that may be paid under such an Award. The foregoing Share Limit is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.”
2. Except as specifically set forth in this Second Amendment, no provision of the Plan is changed, and the Plan is hereby ratified in its entirety and shall remain in full force and effect.
As adopted by the Board of Directors of Riot Blockchain, Inc. on September 14, 2021.
THE BOARD OF DIRECTORS OF RIOT BLOCKCHAIN, INC. June [•], 2022 TABLE OF CONTENTS 202 6th
RIOT BLOCKCHAIN, INC.
3855 Ambrosia Street, Suite 401301
Castle Rock, CO 8010480109 ANNUAL GENERAL MEETING OF STOCKHOLDERS OCTOBER 19, 2021JULY 27, 2022
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS By completing, executing, and submitting the attached Proxy Card, the stockholder of Riot Blockchain, Inc. (the “Company”) constitutes and appoints the Chief Executive Officer of the Company, Mr. Jason Les, as the stockholder’s Attorney and Proxy to appear, attend and vote all of the shares of common stock the stockholder is entitled to vote at the 20212022 Annual General Meeting of the stockholders of the Company, to be held in a virtual-only format at www.virtualstockholdermeeting.com/www.virtualstockholdermeeting.com/RIOT2021RIOT2022on Tuesday, October 19, 2021,Wednesday, July 27, 2022, beginning at 9:00 a.m. (Eastern Time), and at any adjournment or adjournments thereof (the “Annual Meeting”). Such shares shall be voted as indicated with respect to the proposals listed on the Proxy Card and in the discretion of the Proxy on such other matters as may properly come before the Annual Meeting or any adjournment thereof in accordance with and as described in the Notice and Proxy Statement, which are available online at www.proxyvote.com and on our website at www.RiotBlockchain.com. Please either submit your Proxy Card online at www.proxyvote.com by using the 16-digit control number assigned to you on your Proxy Card, by telephone by dialing 1-800-690-6903, or by mail. If you wish to submit your Proxy Card by mail, please mark, date and sign exactly as your name appears on your Proxy Card, including any designation as executor, Trustee, etc., if applicable, and return this Proxy in the enclosed pre-addressed, postage-paid envelope as promptly as possible to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. It is important to return this Proxy properly executed in order to exercise your right to vote if you do not attend the Annual Meeting and vote live and online during the virtual webcast. This Proxy must be signed by a corporation or other entity’s authorized officer to be effective. All co-owners and each joint owner must sign and date this Proxy. [
The 20212022 Proxy Card is attached on the following page]page TABLE OF CONTENTS CERTIFICATE OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
RIOT BLOCKCHAIN, INC. Pursuant to section 78.390 of the Nevada Revised Statutes, RIOT BLOCKCHAIN, INC., a Nevada corporation (the “Corporation”), hereby adopts the following amendment to its Articles of Incorporation, as amended (the “Articles of Incorporation”). 1. The Corporation’s Articles of Incorporation are hereby amended by deleting Article III of the Articles of Incorporation in its entirety and inserting in lieu thereof the following: ARTICLE III
CAPITAL STOCK 3.01 Authorized Capital Stock. The total number of shares of stock the Corporation is authorized to issue shall be three hundred seventy million (370,000,000) shares. This stock shall be divided into two classes to be designated as "Common Stock" and "Preferred Stock." 3.02 Common Stock. The total number of authorized shares of common stock shall be three hundred forty million (340,000,000) shares with no par value per share. 3.03 Preferred Stock. The total number of authorized shares of Preferred Stock shall be thirty million (30,000,000) shares with no par value per share. The board of directors shall have the authority to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and to state in the resolution or resolutions from time to time adopted providing for the issuance thereof the following: (a) Whether or not the class or series shall have voting rights, full or limited, the nature and qualifications, limitations and restrictions on those rights, or whether the class or series will be without voting rights; (b) The number of shares to constitute the class or series and the designation thereof; (c) The preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations, or restrictions thereof, if any, with respect to any class or series; (d) Whether or not the shares of any class or series shall be redeemable and if redeemable, the redemption price or prices, and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (e) Whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and if such retirement or sinking funds be established, the amount and the terms and provisions thereof; (f) The dividend rate, whether dividends are payable in cash, stock of the Corporation, or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividend shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate; (g) The preferences, if any, and the amounts thereof which the holders of any class or series thereof are entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of assets of, the Corporation; (h) Whether or not the shares of any class or series are convertible into, or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (i) Such other rights and provisions with respect to any class or series as may to the board of directors seem advisable. TABLE OF CONTENTS The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any respect. The board of directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any existing class or series of the Preferred Stock and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. 2. Except as specifically provided herein, the Corporation’s Articles of Incorporation shall remain unmodified and shall continue in full force and effect. 3. By execution hereof, the undersigned officer of the Corporation certifies that the foregoing Certificate of Amendment to Articles of Incorporation of RIOT BLOCKCHAIN, INC. was duly authorized and adopted by the Corporation’s board of directors and was approved by the Corporation’s stockholders at the Corporation’s 2022 Annual Meeting of Stockholders by the affirmative vote of stockholders holding [•]% of the shares of the Corporation’s common stock, which constituted a majority of the shares of the Corporation’s common stock that were issued and outstanding on [•], 2022, the record date for the Corporation’s 2022 Annual Meeting of Stockholders. Dated as of [•], 2022. | | | RIOT BLOCKCHAIN, INC. | | | | | | | | | | | By: | | | | | | | | | | [Name, Title] |
TABLE OF CONTENTS THIRD AMENDMENT
TO THE RIOT BLOCKCHAIN, INC. 2019 EQUITY INCENTIVE PLAN This Third Amendment (the “Third Amendment”) to the Riot Blockchain, Inc. 2019 Equity Plan, as amended (the “Plan”), as adopted by the unanimous approval of the members of the Board of Directors (the “Board”) of Riot Blockchain, Inc. (the “Company”) upon the recommendation of the Compensation and Human Resources Committee of the Board (the “Committee”), amends the Plan as set forth herein, effective as of the date ratified and approved by the stockholders of the Company set forth at the end of this document (the “Effective Date”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Plan. WHEREAS, the Plan, as adopted by the Committee and the Board, and as ratified and approved by the stockholders effective October 23, 2019, was adopted as the equity compensation plan of the Company to promote the success of the Company and to increase stockholder value by providing an additional means through the grant of Awards to attract, motivate, retain and reward selected employees and other eligible persons; and WHEREAS, the First Amendment to the Plan (the “First Amendment”) was adopted by the Company and became effective as ratified and approved by the stockholders on November 12, 2020, to increase the number of shares of Common Stock available for issuance under the Plan (the “Share Reserve”) by 3,500,000 additional shares of Common Stock; and WHEREAS, the Second Amendment to the Plan (the “Second Amendment”) was adopted by the Company and became effective as ratified and approved by the stockholders on October 19, 2021, to increase the number of shares of Common Stock available for issuance under the Plan (the “Share Reserve”) by 4,400,000 additional shares of Common Stock; and WHEREAS, the Committee, both in its capacity as Plan Administrator and in furtherance of its responsibility to oversee the compensation and equity incentive practices, plans, and procedures of the Company, has been tasked with the oversight and administration of the Plan; and WHEREAS, the Committee having considered the Company’s issuance of the Awards since the stockholders adopted the Plan, as amended, the Company’s expected needs for equity compensation and the shares of Common Stock available for issuance in the Share Reserve, has determined to adopt this Second Amendment to the Plan to increase the number of shares of Common Stock available for issuance under the Plan by 10,000,000 additional shares of Common Stock; and NOW, THEREFORE, as approved by the Board upon the recommendation of the Committee as of May 31, 2022 and as approved by the stockholders of the Company as of the date listed below, this Third Amendment to the Plan is hereby adopted and approved in all respects. Accordingly, pursuant to this Third Amendment, the Plan is hereby amended as follows: 1. As of the Effective Date, Section 4.2 of the Plan is hereby amended by deleting it in its entirety and is replaced with the following: | | “4.2 Share Limit. The maximum number of shares of Common Stock that may be delivered pursuant to Awards granted to Eligible Persons under this Plan may not exceed 21,500,000 (the “Share Limit”). Such shares of Common Stock may be authorized and unissued shares or, to the extent permitted by applicable law, issued shares of Common Stock that have been reacquired by the Company. Such shares of Common Stock may be used for any type of Award under the Plan, and any or all of the shares of Common Stock up to the Share Limit may be allocated to Incentive Stock Options. Solely for the purpose of determining the number of shares of Common Stock available for Awards under this Section 4.2, the number of shares of Common Stock available for issuance under the Plan shall be reduced by one (1.00) share of Common Stock for every one (1.00) share of Common Stock granted in respect of an Award; provided, however, that in the case of an Award that provides for a range of potential payouts of shares of Common Stock, the number of shares of Common Stock available for issuance under the Plan shall be reduced by the maximum number of shares of Common Stock that may be paid under such an Award. The foregoing Share Limit is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.” | |
2. Except as specifically set forth in this Second Amendment, no provision of the Plan is changed, and the Plan is hereby ratified in its entirety and shall remain in full force and effect. As adopted by the Board of Directors of Riot Blockchain, Inc. on May 31, 2022. As adopted by the Stockholders of Riot Blockchain, Inc. on July 27, 2022
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