Shareholder Fury Grows as Metaplanet Defends Controversial Executive Payout Scheme

Metaplanet’s (3350) independent directors have defended a contentious stock-rights plan for management, saying executives committed their own money and accepted significant financial risk while helping restructure the bitcoin treasury company. The directors’ explanation, however, does not settle questions about CEO Simon Gerovich’s exercised shares or his connection to MMXX Ventures.

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

The controversy largely stems from the design of the original plan. Management’s potential allocation was structured to remain close to 20% of Metaplanet’s fully diluted share count.

That meant the potential pool could expand whenever Metaplanet issued additional shares to raise money for bitcoin purchases. While those offerings diluted existing shareholders, they also increased the number of shares management could potentially monetize.

Metaplanet approved the original plan in 2023, when it was still primarily a struggling hotel operator. Once the company adopted its bitcoin acquisition strategy in April 2024, the arrangement meant that each new equity raise both diluted shareholders and increased Gerovich’s potential option entitlement.

The pool expanded from around 46 million potential shares to 319 million before Metaplanet eventually froze it. Gerovich’s rights covered 113 million shares, including 64 million that he had already exercised.

Amid growing shareholder criticism, the company reduced the pool by 41% on Sept. 11.

In a letter dated Sept. 29, the independent directors said the original arrangement should be considered in light of the conditions when it was established. They noted that a majority of shareholders had approved the plan at that time.

According to the directors, management paid fair value for the rights with personal funds while Metaplanet was facing a financial crisis. The company was still a struggling hotel business, and its eventual transition into a bitcoin-focused firm was far from certain.

None of the current independent directors was on Metaplanet’s board when the rights were originally issued.

The directors said it would be inaccurate to view the arrangement simply as a large compensation award granted after the bitcoin strategy succeeded. They instead described it as an early investment by executives who took on financial risk during the turnaround, while also serving as a long-term incentive to keep management invested in the company’s future.

They further argued that comparisons with other companies should include founder ownership alongside executive pay. Management’s cash compensation, they said, remained limited.

The Sept. 11 changes reduced the pool to 188.2 million shares and removed more than $220 million in potential warrant value, according to Metaplanet.

The revised plan also eliminated automatic increases tied to equity issued after Sept. 1, 2025. Remaining rights now face staggered exercise restrictions extending through 2031, while shares already acquired through exercised rights remain locked until August 2031.

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

Gerovich, the only director holding the rights, was not involved in the review’s deliberations or resolutions, the directors said.

Gerovich’s exercised shares remain unresolved

Despite the directors’ defense, several issues behind the shareholder backlash remain open.

The 64 million shares Gerovich received through exercises in August are among the outstanding questions. He exercised those rights before the Sept. 11 reset of the original plan, and the shares remain outstanding. Metaplanet has previously said they will not be returned because the exercises were valid under the rules in force at the time.

The letter also provides no further explanation regarding MMXX Ventures, a Metaplanet shareholder that has faced scrutiny over its share sales and Gerovich’s personal economic interest in the entity.

MMXX sold Metaplanet shares after the company began pursuing its bitcoin strategy, at a time when Metaplanet was also raising capital through an equity issuance.

Gerovich has said he owns a significant but non-majority stake in MMXX’s parent company and does not participate in its trading decisions.

Metaplanet had disclosed its voting control over MMXX but had not publicly detailed the extent of Gerovich’s personal economic interest associated with the entity’s sales of Metaplanet shares.

Metaplanet stock rose 2% Wednesday to close at 286 yen.

A Sept. 30 update from the company provided additional context on the controversy surrounding the stock-rights arrangement.