How Coinbase is rethinking its approach to compensation
May 10, 2021
By L.J. Brock, Chief People Officer
Coinbase is always evolving. In the last year, we’ve grown our headcount by 100%, hired in 6 new countries; committed to being a remote-first company; established Coinbase as a mission focused company; and recently completed our direct listing and became a publicly-traded company. Still, it is incredibly early for crypto as a new technology, and we’re in it for the long-haul. That’s why we take extraordinary measures to attract top talent to come build with us.
It’s actually one of our most important values as a company: top talent in every seat. Upholding it requires us to constantly revisit our compensation practices to ensure we’re competitive in the marketplace, an attractive employer for candidates, and that our compensation practices reinforce the culture we want to build. Evolving compensation is not just about appealing to candidates, though; it’s also about taking a hard look at industry norms and innovating to relieve pain points, ensure more equity across the workforce, and improve transparency. So what are we doing?
Step 1: Increasing our compensation targets
Ensuring top talent in every seat requires an investment. In 2019, we made the decision to benchmark ourselves across a highly competitive set of peers and some of the largest tech companies in the world. This was an aggressive move for us at the time, as a small, private start-up. This year we’ve continued our commitment to top talent by further increasing our cash and equity compensation — from the 50th percentile amongst our peers to the 75th — across the entire company.
Step 2: Eliminating negotiations from the hiring process
Because our standard offers are world-class, we are officially eliminating negotiations on salary and equity from our recruiting process.
Anyone who wants to work in crypto belongs and is valued at Coinbase. It doesn’t matter what your background is, where you went to school (or bootcamp), where you’ve worked before, or even what you’ve been paid before. If you pass our bar and are hired to do the same work, you get the same offer as the next candidate for a role.
Traditionally people expect they need to negotiate for the best package after being hired in a new job. Those that do this well tend to be rewarded, and those that don’t lose out. These negotiations can disproportionately leave women and underrepresented minorities behind, and a disparity created early in someone’s career can follow them for decades. We want to do everything we can to ensure that’s not the experience at Coinbase. All employees in the same position, in the same location, receive the same salary and equity offer. No exceptions.
Eliminating negotiations doesn’t mean all employees are paid the same after they begin working. In fact, we want compensation differentiation, but it should be solely driven by demonstrated performance and outsized impact on our company and for our customers. We will continue to apply multipliers to our equity and cash rewards for high performers identified through our rigorous performance management process. This way, our high performers receive compensation commensurate with their impact, in addition to accelerated career development and a front row seat to building the cryptoeconomy.
We are OK if we lose some candidates due to this decision — the best candidates for Coinbase are those who are looking for a highly competitive package and are ready to let their contributions speak for themselves.
Step 3: Adopting annual equity grants that drive predictable, real time compensation
Another goal of our new compensation program is to manage volatility and provide as much predictability for our employees as possible. Crypto has historically been volatile, and it’s a reasonable assumption that our stock price may be, too. As we grow, we anticipate more candidates will value predictability in their annual compensation. Instead of a four-year new hire grant (standard at many tech companies), employees will receive annual grants, sized at one-year targets that vest in their entirety each year. An employee’s multi-year equity compensation will no longer be dictated by our company valuation at a single point in time.
Some may say eliminating 4-year new hire grants could hurt retention; we disagree. We don’t want employees to feel locked in at Coinbase based on grants awarded 3 or 4 years prior. We want to earn our employees’ commitment every year and, likewise, expect them to earn their seat at Coinbase.
We are also eliminating the one-year cliff from our new hire grants. We expect new hires to add value on their first day, so it only makes sense for them to start vesting rewards for their contributions.
We also plan to make these annual grants for all employees together at one time, using one share price. This is designed to minimize disparate outcomes that can persist for years after one’s start date. This is another way we are ensuring pay differences are due only to demonstrated performance. Everyone will have the same incentive to add value and grow our company together, which is important for our culture.
These are significant changes, but ones we believe will help us achieve our ambitious goals in this next phase of growth. We are still early in rolling out this program and, like so many things at Coinbase, we’ll assess, understand and iterate on it over time. But we believe it aligns our compensation philosophy with the culture we want to build, and we can’t wait to see what it enables.
If this excites you, please apply to join the team here.