VanEck Criticizes Metaplanet Executive Compensation Over Shareholder Dilution

VanEck labels Metaplanet pay structure as inadequate

The asset management firm VanEck has criticized the executive compensation structure of Metaplanet, a Japanese company that holds Bitcoin as a treasury asset. VanEck argues that Metaplanet's current plan still results in too much shareholder dilution, which happens when a company issues new shares and reduces the ownership percentage of existing investors.

Metaplanet is currently the third-largest publicly traded corporate holder of Bitcoin, with 43,000 BTC. Despite recent efforts by the company to reduce its share pool, VanEck stated that management's interests are still not properly aligned with those of the investors.

Key details from the VanEck report

• VanEck rated Metaplanet’s compensation structure as "Bad," the only firm among the 10 largest digital asset treasury companies to receive the lowest rating.
• Metaplanet’s officer equity exposure is 8.2%, which is about 10 times the 0.8% average of its peers.
• The company's total equity plan equals 14.7% of its shares, nearly four times the industry average.
• Metaplanet recently cut its potential share pool by 41%, but VanEck claims this change is not enough.

Comparing Metaplanet to industry peers

In a report analyzing the top 10 digital asset treasury firms, VanEck highlighted a large gap between Metaplanet and its competitors. For example, MicroStrategy, which is the largest corporate holder of Bitcoin (BTC), has an equity plan equal to only 2% of its shares. VanEck rated MicroStrategy's compensation structure as "Good," noting that its equity reserve is fixed and any increases require a vote from shareholders.

Metaplanet’s high dilution was partly caused by a previous rule that allowed its executive option pool to grow automatically whenever the company issued new shares to buy Bitcoin. This caused the pool to expand from 46 million shares to over 319 million shares before the mechanism was stopped in August.

Why the compensation structure matters for investors

VanEck suggests that unless Metaplanet takes back previous share grants, much of the dilution has already occurred. The asset manager argues that high levels of executive equity can hurt shareholders if the management team is rewarded with a large portion of the company's value at the expense of regular investors.

To fix these issues, VanEck recommended that Metaplanet tie executive pay to specific metrics, such as the amount of Bitcoin held per share. They also suggested that the company should replace its current rights with a compensation plan that has been formally approved by shareholders.

Sources

• Cointelegraph