Metaplanet Fails All Four VanEck Executive Compensation Criteria

VanEck has rated Metaplanet's executive compensation practices as 'poor,' making it the only company among the top 10 digital asset holding firms to receive this rating. Metaplanet failed all four assessment criteria.

The research note was published on September 18. This rating remains in place despite Metaplanet reducing its executive stock option pool twice in the past month.

Digital asset holding companies are publicly listed firms that primarily hold cryptocurrency on their balance sheets. Metaplanet, a Tokyo Stock Exchange-listed company, holds 43,000 Bitcoin (BTC). The company raises funds for Bitcoin purchases through new stock issuance, bonds, and preferred shares.

Stock dilution occurs when existing shareholders' ownership percentages decrease as more shares are issued. Investors accept this in exchange for the company buying sufficient Bitcoin to maintain or increase per-share value.

Executive compensation is often provided through stock options, which give executives the right to buy shares at a predetermined price. If the share price rises, these options gain monetary value. Option pools accumulate such rights; a 2% option pool means executives could claim up to 2% of total shares.

The larger the option pool, the more company value shifts toward executives rather than shareholders.

Metaplanet's option pool background: In 2022, Metaplanet was a struggling hotel operator. In February 2023, shareholders approved a restructuring plan that granted options for 46 million shares at ¥10 per share to seven employees. This amount was not fixed; it was initially set as 20% of all shares the company could issue.

When Metaplanet introduced its Bitcoin strategy in April 2024, it began issuing stocks, bonds, and preferred shares to buy Bitcoin. Only stock sales diluted existing shareholders' equity while tracking option pools.

Metaplanet's total issued shares grew from 153.9 million to approximately 135 million over two years. Consequently, its option pool expanded from 46 million to 319.5 million shares.

Shareholder impact: Shareholders saw their equity diluted as the company bought Bitcoin. Executive claims also grew with this dilution. VanEck estimates that before recent option pool reductions, Metaplanet had delivered only about 80% of purchased Bitcoin to shareholders, with the remaining 20% absorbed by executive option pool dilution.

VanEck's metrics: Metaplanet's option pool represents 14.7% of total shares, far exceeding the industry average of 4.0%. Executive holdings stand at 8.2%, ten times the industry average of 0.8%. Pool size is about four times the average, and executive claim ratio is roughly ten times higher.

Shareholders have never voted on option pool expansions or a 2026 amendment. Compensation is based solely on tenure without shareholder approval.

Metaplanet failed all four criteria while nine other companies passed. Three received excellent ratings: Strategy, BitMine, and others.

Recent changes: The board moved twice under shareholder pressure but has already granted 82.8 million shares to insiders at previous terms. Newly issuable shares total 15.4 million (about 7% of total). VanEck states the situation remains very poor compared to industry standards, maintaining the low rating.

The company must meet four conditions for an improved rating: cancel approximately 273 million issued shares, implement small shareholder approval plans, link compensation to Bitcoin per share, and formalize vesting policies.