Metaplanet CEO Responds to Compensation Controversy, Acknowledges Disclosure Gaps
Bitcoin treasury firm Metaplanet has found itself at the center of a storm regarding its executive compensation plan and the CEO's ties to a major shareholder. Chief Executive Simon Gerovich has issued a public statement addressing the mounting concerns.
At the Heart of the Debate: Pay Plan and Shareholder Links
The controversy focuses on two main issues: the company's 10th series stock acquisition rights plan, established in December 2022 with a pool equivalent to 20% of fully diluted shares, and Gerovich's connection to shareholder MMXX Ventures. Some investors fear potential conflicts of interest.
In his response, Gerovich conceded that the company had failed to adequately explain the compensation plan and the structure of MMXX, leading to confusion. He apologized for this lack of clarity.
Gerovich Clarifies His Role and Decision-Making Authority
Addressing his relationship with MMXX directly, Gerovich provided a clear delineation. He stated that while he is a significant, non-controlling shareholder in MMXX's parent company, he is not involved in MMXX's trading or investment decisions. This aims to separate his role as Metaplanet CEO from his personal investments.
How the Bitcoin Strategy Impacts Pay and Shareholder Value
The situation became more intricate following Metaplanet's strategic pivot to a Bitcoin treasury in April 2024. This strategy involves issuing new shares to fund Bitcoin purchases, which dilutes existing shareholders' stakes.
Concurrently, the size of the compensation pool, pegged to total shares, expands with each dilution, potentially increasing the value of Gerovich's future rights. This dynamic has raised questions about corporate governance and alignment of interests.
Company Actions and Ongoing Investor Discontent
Under pressure, Metaplanet acted in August, capping the compensation pool at 319.464 million shares and imposing a 5-year lock-up period. However, the pool was not reduced to its pre-Bitcoin strategy size.
On August 28, Gerovich exercised 92,000 rights, receiving 64 million new shares, bringing his total holding to approximately 79.5875 million shares, or about 6.2% of the company.
Some shareholders remain unsatisfied, continuing to demand fuller disclosure of MMXX's ownership and calling for the cancellation of a recently added ~273 million share allocation to the reward pool.
Market Reaction: Stock Underperformance Stands Out
The controversy has taken a toll on market sentiment. Metaplanet's shares fell 7% on Monday. Year-to-date, the stock has plunged 43%, starkly underperforming the broader market. In contrast, Japan's Nikkei 225 index has gained 31% over the same period, highlighting investor apprehension about the company's current path.