Metaplanet Directors Defend Controversial Executive Payout Plan Amid Shareholder Anger

Independent directors at bitcoin treasury firm Metaplanet (3350) have defended a controversial management stock-option plan, pointing to executives’ financial exposure and role in restructuring the company, while leaving questions about CEO Simon Gerovich’s exercised shares and MMXX Ventures unanswered.

The plan gives Gerovich and four other employees the right to acquire 188 million Metaplanet shares for 10 yen each, well below the company’s current stock price of about 286 yen.

A key source of shareholder criticism was an unusual provision in the original arrangement that kept management’s potential allocation at roughly 20% of Metaplanet’s fully diluted share count. As the company issued new shares to raise money for bitcoin purchases, existing investors faced dilution while the number of shares potentially available for management to monetize automatically increased.

The original plan was approved in 2023, when Metaplanet was still a struggling hotel operator. After the company shifted toward bitcoin acquisitions in April 2024, the structure meant each new equity issuance used to fund bitcoin purchases diluted existing shareholders while also increasing Gerovich’s potential option allocation.

The potential reward pool expanded from roughly 46 million shares to 319 million as the company continued issuing stock to buy bitcoin. Metaplanet eventually froze the pool. At the time, Gerovich’s rights covered 113 million shares, of which he had already exercised 64 million.

Following the shareholder backlash, Metaplanet reduced the pool by 41% on Sept. 11.

In a Sept. 29 letter, the company’s independent directors argued that the original arrangement was fair considering the circumstances surrounding its creation and noted that it had been approved by a majority of shareholders at the time.

According to the directors, management bought the rights at fair value using personal funds while Metaplanet was facing a financial crisis as a struggling hotel business. They said there had been no guarantee that the company’s transformation would succeed. None of the current independent directors served on the board when the rights were originally issued.

The directors’ position is that the arrangement should not be treated simply as a large compensation package granted after Metaplanet’s bitcoin strategy became successful. Instead, they described it as an early investment by executives who took financial risks while attempting to restructure the company, along with a long-term incentive intended to keep management aligned with its future performance.

The directors also said comparisons with other companies should consider founder ownership in addition to executive compensation. They added that management’s cash compensation remained limited.

Metaplanet said the Sept. 11 changes reduced the pool to 188.2 million shares and eliminated more than $220 million in potential value from the company’s warrant. The revisions also stopped automatic adjustments linked to equity issued after Sept. 1, 2025, and introduced staggered restrictions governing when the remaining rights can be exercised through 2031. Shares already obtained through exercised rights will remain subject to lockups until August 2031.

The company said the changes increased fully diluted bitcoin per share by approximately 8.8%. According to the independent directors, exercised and unexercised rights now account for about 12.5% of the company’s total shares.

The directors said Gerovich, who is the only director holding the rights, took no part in the review’s discussions or resolutions.

Questions remain unanswered

Despite the explanation, the independent directors’ letter does not resolve several issues that contributed to the shareholder backlash.

One of the main unanswered questions concerns the 64 million shares Gerovich obtained by exercising his rights in August, before the original plan was reset on Sept. 11. Those shares remain outstanding, and Metaplanet previously said they would not be returned because the exercises complied with the terms that were in effect at the time.

The letter also does not address concerns surrounding MMXX Ventures, a Metaplanet shareholder whose stock sales and Gerovich’s personal economic interest in the entity have attracted investor scrutiny.

MMXX sold Metaplanet shares after the company adopted its bitcoin strategy, while Metaplanet was simultaneously raising capital through an equity issuance.

Gerovich has said he is a significant but non-majority shareholder in MMXX’s parent company and does not take part in its trading decisions. Metaplanet had disclosed that it held voting control over MMXX but had not publicly specified the extent of Gerovich’s personal economic interest connected to the entity’s share sales.

Metaplanet shares closed 2% higher Wednesday at 286 yen.

The company’s Sept. 30 update added further context to the controversy surrounding the stock-rights plan.

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