Metaplanet reverses course on executive options with 41% cut to potential shares, scraps employee warrant plan

Metaplanet is making a U-turn on a significant portion of a controversial executive compensation plan after waves of shareholder criticism over the potentially massive number of new shares it could create.

The Tokyo-listed company, which also happens to be the third-largest publicly traded bitcoin treasury, said Thursday it will cut the number of potential shares tied to its Series 10 stock acquisition rights by 41%, from about 319.5 million to 188.2 million.

The Series 10 program, essentially options allowing executives and other holders the right to buy shares at a heavily discounted 10 yen each, dates back to early 2023, more than a year before Metaplanet (MTPLF) became a bitcoin treasury company. But unlike typical fixed option grants, the number of shares available under the plan could grow as Metaplanet issued more stock, causing the pool to balloon as it raised money to buy bitcoin.

CEO Simon Gerovich said the updated changes wipe out more than $220 million of warrant value and increase bitcoin held per diluted share by about 8.8%.

The company is effectively dialing back to a year. The Series 10 conversion ratio, which had risen to 696 shares for each option right, will be slashed back to 410 shares, roughly where it stood around this time last year before Metaplanet's international share offering.

Metaplanet said it chose that as the cutoff because its earlier stock sales had generated much more bitcoin value per share. It said later capital raises became less effective at growing its bitcoin (BTC) holdings on a per-share basis. Gerovich acknowledged that the later issuance had given Series 10 holders "disproportionate value" relative to existing shareholders.

The company is also delaying when the remaining options can be exercised, with one-third becoming available in each of 2029, 2030 and 2031. Shares received through the program still cannot be sold until August 2031.

Metaplanet also scrapped a plan to transfer some of the old Series 10 rights into a new employee incentive pool. Those rights will instead be canceled, and the company plans to develop a separate compensation program.

The changes come amid a bruising stretch for Metaplanet shares. The stock fell about 17% over two trading sessions earlier this week after Gerovich's initial response to the controversy failed to satisfy investors.

Metaplanet shares are down more than 38% year-to-date, significantly underperforming both bitcoin, which has fallen about 10%, and Strategy (MSTR), whose shares are down roughly 13% over the same period.