Metaplanet Board Defends Controversial Series 10 Warrants After Shareholder Backlash

Metaplanet's independent directors defended the company's Series 10 stock-acquisition rights in a letter dated Sept. 29, saying weeks of shareholder criticism over dilution had overlooked the plan's origin as founder "turnaround equity" rather than executive pay.

The letter, posted by Chief Executive Simon Gerovich along with a fact sheet, comes after the Tokyo-listed Bitcoin treasury company cut the potential Series 10 share pool by about 41% on Sept. 11. Gerovich said the documents supply "important context that much of the recent commentary has missed."

He also said asset manager VanEck had removed a section of a recent report on the warrants because it "did not meet its research standards."

What Series 10 was built to do

Series 10 predates Metaplanet's April 2024 pivot to a Bitcoin treasury, when it was still a struggling Japan-focused hotel operator. Rather than a fixed grant, the rights were designed to keep the leadership team's stake near 20% as the share count grew.

Shareholders approved the terms at an extraordinary meeting on February 7, 2023. About 98% of votes were in favor, including then-majority holder EVO; excluding EVO, support was 78.3%.

According to the directors, holders paid for the rights with their own money at what the company calls fair value. They also accepted multi-year vesting and took low cash pay relative to peers.

How a 20% ratchet became a revolt

The Bitcoin pivot turned the 20% target into a liability. Each equity raise to buy bitcoin enlarged management's claim alongside it, expanding the potential pool from tens of millions of shares to about 319.5 million. Critics argued that every raise, accretive or not, diluted common holders while growing the insiders' slice.

The board has since moved in three steps. On August 18 it froze the pool and ended the evergreen adjustment, so the pool stopped growing with new issuance. Ten days later, Gerovich exercised rights and received about 64 million shares, locked up until August 2031.

On September 11, with Gerovich recused, the board cut the conversion ratio from 696 to 410 shares per right. That shrank the potential pool to about 188.2 million shares and unexercised rights to about 105 million.

The new 410 ratio roughly matches the level before Metaplanet's September 2025 international offering. The company says the reset extinguished more than $220 million of warrant value and lifted bitcoin per fully diluted share by about 8.8%.

Remaining unvested rights now vest in equal thirds in 2029, 2030 and 2031. A planned transfer of rights into an employee incentive pool was withdrawn. Exercised and unexercised Series 10 rights now equal about 12.5% of the company, a share that shrinks with further issuance.

The board's case

None of the independent directors sat on the board when the warrants were issued. They say every change was made with holders' consent and without extra compensation for giving up the prior terms.

Their core argument is about framing. The remaining rights, they say, are founder ownership held by management, not a peer-style cash-plus-options package stacked on top of a large founder stake. "Comparisons to executive-compensation figures alone give an incomplete picture," they wrote.

What the letter leaves open

The letter does not revisit two flashpoints that still circulate. The first is the roughly 64 million shares Gerovich received under the old terms; the company says that exercise was valid when it happened and will not be unwound. The second is his disclosed economic interest in MMXX Ventures, a Metaplanet shareholder whose trading has drawn conflict-of-interest questions.

The VanEck dispute is also unsettled. VanEck's Matthew Sigel had called the September 11 cut a "meaningful concession." Yet a mid-September VanEck screen still rated Metaplanet the only "Bad" name among the ten largest digital-asset treasuries on executive-pay tests: pool size, officer concentration, growth without a shareholder vote and no performance hurdles.

Gerovich's claim that VanEck pulled its Series 10 section for research-standards reasons is now part of the company's public line. Critics counter that one retracted passage does not change the broader poor grade on pay structure.

How investors reacted

Adrian Morris said Metaplanet "has a long way to go before regaining retail investor trust (if ever)." He argued, cynically, that a strong Bitcoin market in 2027 may be what actually repairs the stock: "Number Go Up cures all ills."

Replies split along the same line. One user noted that ASST had fallen out of favor a year earlier over a private placement (PIPE) and later recovered. Another said broken trust does not come back, and that investors will simply buy Strategy or ASST instead.

What comes next

Gerovich said the warrant changes are "complete" and that Metaplanet's focus is becoming "a global financial services innovator powered by Bitcoin." That pitch underpins its securities-firm acquisition and product plans in Japan. The directors say a new performance-based incentive plan is being designed with an international compensation adviser, and that communication will improve in both Japanese and English.

The reset is real. A large unvested slice is gone, the ratchet no longer applies to issuance after September 1, 2025, and lockups run into 2031. But the letter neither claws back insider stock already issued nor puts the remaining 12.5% to a fresh shareholder vote.

That is why the market's split reaction is coherent. Bulls hear institutionalization. Bears hear a founder defending a structure that has already paid out, and betting that the next Bitcoin cycle will make governance feel smaller than the price chart.