It is a golden trophy that has a claw of a crab on it, which looks similar to the one on the Magic Claw. It has a penny at the top, because it is the award for the Penny Pinchers' contest.
Role in episode
After Mr. Krabs is nominated for the award at the Krusty Krab, he goes to the hotel where other crabs are found. Later, videos of all the nominees' stingy acts are shown to determine who is the cheapest crab. After being disqualified because of SpongeBob accidentally lying and talking about his generosity on stage, Mr. Krabs cries until SpongeBob gives him the idea to steal what is in their hotel room.
When they are discovered, the League of Cheapskate Crabs gives it to Mr. Krabs because of how cheap stealing an entire room was. After Mr. Krabs takes the trophy, it is shown to be attached to a string, and the person who gives it away pulls it back, similar to the trick Mr. Krabs taught SpongeBob earlier in the episode about snatching the coin from the bellhop.