A rule restructuring on Sept. 11 slashed Metaplanet’s executive stock option allocation by 41.1%, reducing potential issuance from 319.46 million to 188.19 million shares. The drastic decision came in response to mounting shareholder criticism over the substantial size of the Series 10 stock acquisition rights program for the board of directors. However, the allocation cut came too late for Simon Gerovich’s position. On Aug. 28, two weeks before the regulatory overhaul took effect, the CEO exercised 92,000 of his rights to receive 64,032,000 direct shares.
Exercising the options boosted Gerovich’s holding from 15.5 million to 79.6 million shares within days. Metaplanet’s independent board released an official letter on Sept. 29 defending the company’s executive compensation structure. Gerovich was absent from board deliberations due to his status as the holder of the rights in dispute.
Legacy of the Hotel Business Era
The board’s defense letter highlighted the history behind the creation of Series 10 stock rights at Metaplanet. The option program originated when the company was still a financially distressed hotel operator, long before it began accumulating Bitcoin. Management at the time purchased the option rights using personal funds at fair value.
Purchasing the rights with personal capital was paired with strict multi-year vesting conditions. Executives traded the certainty of a monthly salary for cash compensation far below the pay standards of leaders at other companies. The board deemed the equity rewards justified for management that endured the crisis period.
The company is left with approximately 105.37 million unexercised option rights following the restructuring. Metaplanet calculated that trimming the option pool eliminated the potential issuance of warrants worth over $220 million. The reduced potential share overhang provides reassurance to public investors: the Bitcoin holding per fully diluted share rose by 8.8%.
Strict Conditions for Remaining Options
The board of directors refused to cancel Gerovich’s 64 million new shares, leaving them intact despite shrinking the allocation pool by 41.1%. As a compromise, the company locked up all shares resulting from the CEO’s exercise until Aug. 17, 2031.
Metaplanet tightened the exercise conditions for the remaining 105.37 million options into three tranches. Rights holders may only exercise one-third of their initial allocation in 2029, the next third in 2030, and the final third in 2031.
The lengthy lockup aligns with the Bitcoin accumulation strategy underway on the company’s balance sheet. Metaplanet holds 43,000 BTC after adding 2,823 BTC throughout the second quarter. Since the launch of its first Bitcoin acquisition program in April 2024, the ratio of Bitcoin per fully diluted share has surged 60-fold. The executive stock dispute now tests how the board of directors maintains investor confidence as the scale of its business balloons. Reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
