GameStop CEO and board chair Ryan Cohen may soon be compensated solely with performance-based stock options if the retailer’s shareholders approve a payment plan developed by the board. Cohen wasn’t involved in developing the plan but has agreed to it.
In order for the stock options to fully vest, GameStop would need to reach a $100 billion market capitalization and $10 billion in cumulative performance EBITDA, according to the plan. The compensation would be meted out in nine tranches as milestones are achieved.
For the first, if GameStop doesn’t reach a $20 billion market cap and cumulative performance EBITDA of $2 billion, no options will vest.
Otherwise, Cohen would receive no guaranteed pay in any form, including salary, cash bonuses or stock that vests over time, making his compensation “entirely ‘at-risk,’” the company said. The total award consists of stock options to purchase 171,537,327 shares of Class A common stock at $20.66 per share.
The rationale for the payment scheme is based on Cohen's track record since joining GameStop’s board five years ago. Cohen, the founder and former CEO of Chewy, and other former Chewy executives led an activist effort to shake up GameStop's leadership, as the gaming retailer stumbled badly in the streaming era.
In those five years, GameStop’s market cap has grown from about $1.3 billion to about $9.3 billion today, a 615% increase, the company said Wednesday. In addition, total selling, general, and administrative expenses plunged more than 44%, from $1.7 billion in fiscal year 2021 to $950.8 million for the most recent trailing four fiscal quarters. And the company has swung from a net loss of $381.3 million to net income of $421.8 million.
The company’s board, with Cohen recusing, has granted the stock option plan, saying it’s “designed to incentivize Mr. Cohen to achieve extraordinary growth,” according to its press release Wednesday. He will also recuse himself from the shareholder vote, expected to take place in March or April.
The setup, which resembles Elon Musk’s trillion-dollar compensation plan at Tesla, stands to garner Cohen some $35 billion, according to Reuters’ calculations. However, the goals are sky high: GameStop’s Q3 sales fell almost 4.6% to $821 million, with net income growing to $77.1 million from $17.4 million in 2024. The retailer had declines in hardware, accessories and software as well as in its bitcoin assets.
