Metaplanet’s (3350) independent directors have defended the bitcoin treasury firm’s controversial stock-option arrangement for executives, citing management’s financial exposure during the company’s restructuring. However, their explanation does not resolve questions surrounding CEO Simon Gerovich’s previously exercised shares or MMXX Ventures.
Under the revised plan, Gerovich and four other employees have rights to acquire 188 million Metaplanet shares at 10 yen apiece, significantly below the stock’s current price of about 286 yen.
The structure of the original arrangement became a major point of contention among shareholders because management’s potential allocation was designed to stay at roughly 20% of Metaplanet’s fully diluted share count.
That mechanism meant the potential pool available to management expanded whenever Metaplanet issued new shares to raise funds for bitcoin purchases. Existing shareholders were consequently diluted, while the number of shares that management could potentially monetize increased at the same time.
Metaplanet approved the original plan in 2023, when the company was operating as a struggling hotel business. After shifting its strategy toward bitcoin purchases in April 2024, the same mechanism continued to increase Gerovich’s potential entitlement whenever the company raised capital through new equity.
The reward pool expanded from roughly 46 million potential shares to 319 million as Metaplanet issued stock to finance bitcoin acquisitions. The company later froze the pool. At that point, Gerovich held rights covering 113 million shares and had already exercised rights covering 64 million.
Following mounting shareholder criticism, Metaplanet reduced the pool by 41% on Sept. 11.
In a letter dated Sept. 29, the independent directors said the original plan was reasonable given the conditions at the time and had received approval from a majority of shareholders when it was introduced.
They said the executives had acquired the rights at fair value using their own money while Metaplanet was facing a financial crisis. At that stage, the company remained a troubled hotel operator, and there was no certainty that its planned transformation would succeed.
None of Metaplanet’s current independent directors was serving on the board when the rights were initially issued.
The directors argued that the stock rights should not be interpreted solely as compensation awarded after Metaplanet’s bitcoin strategy proved successful. Instead, they described the arrangement as an investment made by executives who took financial risks during the turnaround, while also providing a long-term incentive to keep management financially aligned with the company.
They also said comparisons with other companies should take founder ownership into account alongside executive compensation. Management’s cash compensation, they added, remained relatively restrained.
The Sept. 11 changes reduced the potential pool to 188.2 million shares and eliminated more than $220 million in potential warrant value, according to the company.
The revised structure also ended automatic increases tied to equity issued after Sept. 1, 2025. It introduced staggered exercise restrictions for the remaining rights through 2031, while shares already obtained through exercised rights remain locked up until August 2031.
Metaplanet said the changes increased fully diluted bitcoin per share by approximately 8.8%. The independent directors said exercised and unexercised rights together account for roughly 12.5% of the company’s total shares.
Gerovich, the only director who holds the rights, did not take part in the review’s deliberations or resolutions, according to the independent directors.
Gerovich shares remain a key question
The directors’ letter nevertheless leaves several issues that prompted shareholder criticism unresolved.
One concerns the 64 million shares Gerovich acquired through exercises in August, before the Sept. 11 restructuring of the original plan. Those shares remain outstanding. Metaplanet previously said they would not be returned because the exercises were valid under the terms applicable at the time.
The letter also does not explain the questions surrounding MMXX Ventures, a Metaplanet shareholder that has attracted attention because of its share sales and Gerovich’s personal economic interest in the entity.
MMXX sold Metaplanet stock after the company adopted its bitcoin strategy, while Metaplanet was raising capital through an equity offering.
Gerovich has said he owns a significant but non-controlling stake in MMXX’s parent company and does not participate in its trading decisions.
Metaplanet had previously disclosed that it controlled MMXX’s voting rights but had not publicly specified the extent of Gerovich’s personal economic interest related to the entity’s sales of Metaplanet shares.
Metaplanet stock finished Wednesday’s session 2% higher at 286 yen.
An update issued Sept. 30 added further context to the controversy surrounding the company’s stock-rights arrangement.
