Metaplanet cuts option program by 41% amid share price drop: what investors were afraid of
Japanese company Metaplanet, which turned Bitcoin into its main reserve asset, made concessions to shareholders after a dispute over executive compensation and possible capital dilution.
On September 11, the company decided to reduce the number of potential shares under its 10th series of options by 41.1% — from 319.46 million to 188.19 million.
The decision came after a notable drop in the company's share price and weeks of criticism from investors. The main question turned out to be simple: if the company constantly issues new shares to buy Bitcoin, how much additional value do BTC holders receive — and how much do existing shareholders lose due to dilution of their stakes.
What exactly Metaplanet changed
This concerns the 10th series of stock acquisition rights — essentially options that allow their holders to receive company shares under pre-set conditions.
Before the current decision, one right corresponded to 696 Metaplanet shares. Now the coefficient has been reduced to 410 shares.
As a result, the maximum number of potential shares under the program has decreased:
- from 319,464,000;
- to 188,190,000 shares.
The company also changed the schedule for exercising the remaining rights. They are expected to be exercisable gradually — roughly one third in 2029, 2030, and 2031.
At the same time, the existing lock-up restriction on selling shares received under the program remains in place until August 17, 2031.
They decided to abandon the separate employee program altogether
Another important turn concerns the plan that Metaplanet announced only in August.
The company intended to transfer part of the existing stock acquisition rights into a separate long-term incentive program for executives and employees.
Now this scheme has been completely abandoned.
Metaplanet stated that instead it would develop a new compensation system to attract international specialists. Specific parameters have not yet been presented.
That is, the company decided not only to reduce the old option pool, but essentially to restart the development of a future compensation system from scratch.
Why an ordinary option program turned into a problem
The main feature of this story is the age of the program itself.
The 10th series was created back in early 2023 — more than a year before Metaplanet radically changed its strategy and became a bitcoin treasury company.
In the original structure, the number of shares that could be obtained through options was not strictly fixed.
It was adjusted so that the option pool corresponded to approximately 20% of the fully diluted share count of the company.
For a small business, such a formula seemed one way. But after the transition to a Bitcoin accumulation strategy, everything changed.
Metaplanet began issuing shares to buy Bitcoin
Starting from 2024, the company actively raised capital through equity markets and used the funds to purchase BTC.
The more new shares Metaplanet issued, the larger the old option pool became.
As a result, the program that originally corresponded to roughly 46 million potential shares grew over time to approximately 319.5 million.
It was precisely this automatic link that raised questions among investors.
It turned out that new share issuances to buy Bitcoin simultaneously increased the number of shares that could be received by holders of the old options.
Why dilution is so important for a bitcoin treasury company
For a company that holds Bitcoin as its primary reserve asset, the amount of BTC on the balance sheet is not the only important indicator.
No less important is how much Bitcoin is per share.
Suppose a company owns 100 BTC and has 100 shares. Then each share roughly corresponds to 1 BTC.
If it issues 100 more shares but buys only 50 BTC with the proceeds, total reserves increase to 150 BTC, but each of the now 200 shares corresponds to only 0.75 BTC.
Total reserves grew, while the existing shareholder's share in Bitcoin decreased.
Therefore, investors in bitcoin treasury companies closely monitor not only cryptocurrency purchases, but also at what price those purchases are financed.
Metaplanet itself uses Bitcoin per Share as a key indicator
The company openly builds its strategy around increasing the amount of Bitcoin per share.
Metaplanet calls one of its key metrics BTC Yield — a measure that is supposed to show how Bitcoin holdings change relative to the number of shares.
Currently, the company holds about 43,000 BTC on its balance sheet.
To accumulate these holdings, Metaplanet actively uses equity issuance, stock acquisition rights, debt financing, and other capital market instruments.
Such a model can work especially effectively when the company's shares trade at a high valuation relative to the value of its Bitcoin. Then new shares can be sold at a high price, and the money used to buy more BTC.
But if the share price falls, this arithmetic becomes considerably more difficult.
Shares lost about 17% in just two trading sessions
The dispute over the program intensified sharply in early September.
Over two trading sessions, Metaplanet shares declined by approximately 17%. Only on Tuesday, the quotes fell by nearly 10%.
Since the beginning of the year, the company's shares have lost more than 38%, while Bitcoin itself over the same period fell by about 10%.
For comparison, shares of Strategy — the largest and best-known company built around a corporate Bitcoin strategy — lost about 13%.
Thus, Metaplanet investors faced an unpleasant situation: the company continued to hold a huge amount of BTC, but its own shares were falling much faster than Bitcoin itself.
August changes were not enough for investors
Metaplanet had already tried to allay shareholder concerns on August 18.
Then the company abolished the mechanism of further automatic growth of the option pool and fixed its maximum at approximately 319.46 million potential shares.
A five-year lock-up on selling shares received under the program was also introduced.
But the problem for critics remained: the program stopped growing, but the already accumulated huge volume of potential shares did not disappear.
That is why investors demanded not just freezing the pool, but actually reducing it.
CEO had already received more than 64 million shares
Additional attention to the program was drawn by an action of Metaplanet CEO Simon Gerovich.
On August 28, he exercised 92,000 rights from the 10th series and received 64.032 million common shares of the company.
After the transaction, his personal stake increased to approximately 79.6 million shares.
The exercise price under the program is 10 yen per share. However, the rights themselves were initially paid for, so 10 yen should not be considered as the full economic value of the entire compensation.
The shares received are also subject to the sales restriction until August 2031.
Nevertheless, the scale of the issuance further heightened investors' attention to potential capital dilution.
Now the company is eliminating part of the potential dilution
After the new decision, the situation changes more noticeably.
Metaplanet is reducing the total potential size of the program by more than 131 million shares.
Simon Gerovich stated that the changes eliminate more than $220 million in potential rights value and increase Bitcoin per fully diluted share by approximately 8.8%.
These calculations are the company's own and depend on the share price used and capital structure.
But the direction of change is clear: with fewer potential future shares, existing shareholders receive a larger share of the company's Bitcoin.
Why this dispute arose around bitcoin treasury companies in the first place
Metaplanet is just one example of a rapidly growing category of public companies that use equity markets to accumulate cryptocurrency.
The model became popular thanks to Strategy: the company raised capital through equity and debt instruments, and then used it to purchase Bitcoin.
For an investor, such a stock becomes a way to gain exposure to BTC through traditional stock markets.
However, the economic outcome depends on the structure of each new transaction.
If the company issues shares at a high price and receives enough Bitcoin, the amount of BTC per share can grow.
If new shares are issued too cheaply or potential dilution becomes too large, an increase in total Bitcoin reserves does not necessarily mean growth in value for each shareholder.
Therefore, the market looks not only at the number of BTC
Metaplanet currently holds 43,000 Bitcoins — a huge amount for a public company.
But investors are increasingly asking another question: how much of the value of these holdings actually corresponds to one share after taking into account all possible new issuances, options, and other instruments.
That is why the Series 10 story became so sensitive.
The dispute was not about whether management should be compensated in shares. Such a mechanism is widely used by public companies.
The question was whether the old program should automatically become bigger every time the company issues shares to finance a completely new Bitcoin strategy.
What changes for investors now
The decision of September 11 significantly reduces potential dilution, but does not eliminate it entirely.
Up to 188.19 million shares can still be issued under the program.
In addition, Metaplanet continues to use capital markets to implement its bitcoin treasury strategy, so the number of company shares may change for other reasons as well.
The future value of the shares will depend not only on the BTC exchange rate, but also on the terms of new capital raises, the cost of financing, and the company's ability to increase Bitcoin per share.
That is the main lesson of the conflict around Metaplanet: for a bitcoin treasury company, a record cryptocurrency reserve in itself does not guarantee benefits for shareholders. No less important is how many new shares had to be issued or promised to build that reserve.
