GameStop Unveils Ambitious Compensation Package for CEO Ryan Cohen
On Wednesday, GameStop revealed a hefty compensation plan worth roughly $35 billion for its CEO, Ryan Cohen. This package is contingent on a significant turnaround, requiring Cohen to boost the struggling retailer’s market value more than tenfold while also ramping up profits.
To achieve these ambitious goals, GameStop will need a major transformation. The shift comes as traditional brick-and-mortar stores have suffered from a decline in revenue, largely due to consumers opting for online shopping for their gaming needs.
The company has seen a staggering drop in annual revenue—over 35% since 2022—and its stock has fallen by 80% compared to its peak in 2021, during the meme stock frenzy that captivated retail investors.
Cohen’s new salary plan sets high stakes; he must elevate the company’s market capitalization to $100 billion and secure a cumulative EBITDA (earnings before interest, taxes, depreciation, and amortization) of $10 billion.
However, this compensation does not guarantee any fixed salary, cash bonuses, or stock options for Cohen. As it stands, GameStop’s market cap is around $9.26 billion.
In recent times, meme stocks experienced a boom, amassing a record $34 billion in gains in 2021.
Interestingly, GameStop’s stock rose over 4% during early trading on Wednesday, landing it as the #2 trending stock on Stocktwits, a platform popular among retail investors.
This compensation package is reminiscent of the 10-year incentive plan granted to Elon Musk at Tesla, which links his pay strictly to stock options based on achieving challenging market and profit targets.
GameStop outlined that Cohen’s offer includes stock options for over 171.5 million shares priced at $20.66 each.
Cohen’s potential total compensation can reach nearly $35 billion, not factoring in exercise costs around $3.5 billion, according to various calculations.
Should GameStop’s market valuation climb, it could benefit Cohen significantly, especially since he holds an 8.3% stake in the company, making him its second-largest shareholder.
Cohen, who became a billionaire investor on the board in January 2021 and stepped into the CEO role in September 2023, has guided GameStop towards a profitable path by implementing aggressive cost-cutting measures, including shuttering numerous stores.
This compensation plan is structured in nine tranches, each linked to specific performance goals. GameStop’s board has reached an agreement with Cohen, and shareholders will have the chance to approve this plan at a special meeting expected in March or April.
