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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 1, 2024
MARATHON
DIGITAL HOLDINGS, INC.
(Exact
name of Registrant as Specified in Its Charter)
Nevada |
|
001-36555 |
|
01-0949984 |
(State
or Other Jurisdiction
of
Incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
101
NE Third Avenue, Suite 1200
Fort
Lauderdale, FL 33301
(Address
of principal executive offices and zip code)
(800)
804-1690
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
|
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading Symbol(s) |
|
Name
of each exchange on which registered |
Common
Stock |
|
MARA |
|
The
Nasdaq Capital Market |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
5.02. |
Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Long-Term
Equity Incentive Compensation Program
As
a key element of its compensation program, Marathon Digital Holdings, Inc. (the “Company”) provides long-term equity incentive
compensation to its employees, including its named executive officers, which is referred to as the Long-Term Incentive Program (“LTIP”).
LTIP awards are issued in the form of restricted stock units (“RSUs”) and are granted pursuant to the Company’s 2018 Equity
Incentive Plan.
Purpose
of LTIP Awards
The
LTIP aligns with the Company’s pay-for-performance philosophy since the number of awards that vest is tied directly to the achievement
of a pre-determined performance metric, and the awards therefore serve to reward the achievement relative to this metric (refer to the
section titled “—Vesting of 2024 LTIP Awards” for additional information). The LTIP awards also align
the interests of the Company’s executives with those of its stockholders since the value of the awards is directly tied
to the Company’s stock price. Further, the LTIP is designed to be retentive because, even after the LTIP awards have been earned
based on performance, they continue to vest over a long-term service period. Accordingly, the issuance of the LTIP awards aligns closely
with the Company’s executive compensation objectives.
Determination
of Target LTIP Awards
For
2024, each named executive officer was assigned a target value for the LTIP award, which was reflected as a multiple of base salary for
2024. In determining the value of the 2024 LTIP awards (the “2024 LTIP Awards”), the Compensation Committee of the Board
of Directors (the “Committee”) considered the following factors:
|
● |
the
Company’s recent growth rate relative to a number of metrics that are significant for driving alignment with stockholder
value, including stock price, market capitalization and enterprise value both in absolute terms and relative to peer group companies; |
|
● |
the
productivity of the Company’s employees with respect to factors such as revenue per employee and total general and administrative
expenses relative to peer group companies; |
|
● |
the
value of the long-term equity incentive compensation paid by peer group companies, as determined based on a review of compensation
data provided by Compensia, which is the Committee’s independent compensation consultant; |
|
● |
the
Company’s role as an industry leader in the Bitcoin mining and digital asset industry; |
|
● |
the
Company’s relatively high risk-profile due to factors such as regulatory uncertainty, stock price fluctuation and employee
mobility; and |
|
● |
individual
performance of and expected contributions from the named executive officers. |
Based
on this assessment, on May 1, 2024, the Committee granted 2024 LTIP Awards to the named executive officers with the value to be based
upon the Company’s achievement of a pre-determined performance metric relating to total stockholder return (“TSR”)
as further described below. The following table sets forth the value of the RSUs that will be earned by each named executive officer assuming the Company’s achievement
of 100% of the TSR target:
Name |
|
Value
of RSUs
Assuming Achievement of 100% of TSR Target
($) |
Fred
Thiel |
|
17,100,000 |
Salman
Khan |
|
11,250,000 |
Zabi
Nowaid |
|
4,500,000 |
Vesting
of 2024 LTIP Awards
The
number of 2024 LTIP Awards that are subject to vesting is directly correlated with the Company’s TSR for the period from
January 1, 2024 through December 31, 2024 (the “Performance Period”) relative to a TSR index for certain of the Company’s
peer group companies for the Performance Period. For this purpose, TSR effectively compares the percentage change in market capitalization
for the Company relative to that of its peer group companies during the Performance Period.
The
Company’s performance with respect to the TSR metric will be expressed as a percentile relative to the performance of the peer
group, and the number of awards that will vest will be determined by reference to the percentile as indicated in the table:
Percentile Relative to Peer Group (%) | |
Payout Relative to Target (%) | |
85.0+ | |
| 200.0 | |
75.0 - 84.9 | |
| 175.0 | |
65.0 - 74.9 | |
| 150.0 | |
55.0 - 64.9 | |
| 125.0 | |
45.0 - 54.9 | |
| 100.0 | |
35.0 - 44.9 | |
| 75.0 | |
25.0 - 34.9 | |
| 50.0 | |
15.0 - 24.9 | |
| 25.0 | |
<15.0 | |
| 0.0 | |
Accordingly,
based on the Company’s TSR performance relative to the peer group, the 2024 LTIP Awards will vest between 200% and 0% of the target
amount.
For
illustrative purposes, the following table sets forth the number of shares to be vested and the value of the LTIP Awards at each of the
200% level (maximum), the 100% level (target), and the 50% level:
Name | |
Number of RSUs at 200% of Target (#) | | |
Value of RSUs at 200% of Target ($) | | |
Number of RSUs at 100% of Target (#) | | |
Value of RSUs at 100% of Target ($) | | |
Number of RSUs at 50% of Target (#) | | |
Value of RSUs at 50% of Target ($) | |
Fred Thiel | |
| 1,646,606 | | |
| 34,200,000 | | |
| 823,303 | | |
| 17,100,000 | | |
| 411,651 | | |
| 8,550,000 | |
Salman Khan | |
| 1,083,293 | | |
| 22,500,000 | | |
| 541,647 | | |
| 11,250,000 | | |
| 270,823 | | |
| 5,625,000 | |
Zabi Nowaid | |
| 433,317 | | |
| 9,000,000 | | |
| 216,659 | | |
| 4,500,000 | | |
| 108,329 | | |
| 2,250,000 | |
The
aggregate number of RSUs granted to each executive was equal to (x) the value of the 2024 LTIP Award at 200% of target divided by (y)
the average closing price of the Company’s common stock for the 100 consecutive trading days prior to and including the grant date,
which was $20.77 per share. Notably, this per share value was higher than the closing price of the common stock on the grant date, which
was $16.07. As a result, the grant date fair value of the 2024 LTIP Awards as determined for purposes of SEC rules will be lower than
the value reflected in the table.
The
Committee expects to make a determination regarding the Company’s performance relative to the TSR metric in January 2025, which
will establish the maximum number of shares that are subject to vesting pursuant to the 2024 LTIP Awards. Once that determination has
been made, (i) 25% of the 2024 LTIP Awards will vest on January 31, 2025, and (ii) the balance of the awards will vest
in 12 equal calendar quarters (with 6.25% of the shares vesting each quarter), subject to the named executive officer’s continued
service to the Company through each vesting date. Accordingly, even following a determination that the 2024 LTIP Awards have been
earned based upon the Company’s performance relative to the TSR metric, the awards will continue to vest over approximately
a three-year period to ensure they have a strong retentive component.
Strategic
Organization of Business Units
The
Company is pursuing a strategic initiative to organize itself into business units commencing during the second quarter of 2024. The primary
purpose of this initiative is to better align the Company’s internal structure with its pursuit of growth opportunities, to
further the Company’s focus on strategic initiatives, to bolster accountability by allowing the Company to better assess business
unit performance, and to drive the Company’s efforts to diversify its business portfolio—all with the goal of maximizing
long-term stockholder return.
As
part of this initiative, Mr. James Crawford will lead the Company’s digital asset mining business unit, which is mainly comprised
of overseeing global Bitcoin mining operations. Mr. Ashu Swami will lead the Company’s technology business unit, which will include
the Company’s development of software, hardware and other technological advancements supporting the Bitcoin ecosystem. Mr. Adam
Swick will lead the Company’s strategic initiatives and energy harvesting business unit, which will include the Company’s
development of sustainable and inclusive energy projects, such as converting waste into energy, methane gas recapture, stabilizing the
energy grid by utilizing stranded or excess energy, and reusing heat generated by mining systems for industrial and commercial processes.
The
Company’s executive officers pursuant to Rule 3b-7 of the Securities Exchange Act of 1934, as amended, are Mr. Fred Thiel, the
Company’s Chief Executive Officer and Chairperson of the Board, Mr. Salman Khan, the Company’s Chief Financial Officer, and Mr. Zabi
Nowaid, the Company’s General Counsel.
The
Company intends to provide additional disclosure about the scope and impact of the strategic organization in its future disclosures.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
MARATHON
DIGITAL HOLDINGS, INC. |
|
|
|
Date:
May 6, 2024 |
By: |
/s/
Zabi Nowaid |
|
Name: |
Zabi
Nowaid |
|
Title: |
General
Counsel and Corporate Secretary |
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