NewsGlobalGameStop Announces $35 Billion Performance-Based Compensation Package for CEO Ryan CohenGameStop Announces $35 Billion Performance-Based Compensation Package for CEO Ryan Cohen
GameStop unveiled a $35 billion performance-based compensation package for CEO Ryan Cohen, requiring the company's market cap to grow from $9.26 billion to $100 billion and achieve $10 billion cumulative EBITDA. Cohen receives no guaranteed pay, with compensation tied entirely to stock options for 171.5 million shares at $20.66 per share across nine performance tranches. The plan requires shareholder approval at a special meeting expected in March or April.
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GameStop has announced a groundbreaking $35 billion compensation package for CEO Ryan Cohen, structured entirely around performance targets that demand a dramatic turnaround of the struggling videogame retailer. The ambitious plan requires Cohen to transform the company's financial trajectory while navigating significant market challenges that have plagued the brick-and-mortar gaming industry.
Performance Targets and Market Challenges
The compensation package sets exceptionally high benchmarks for Cohen's leadership. The plan requires growing GameStop's market capitalization from its current $9.26 billion to $100 billion while achieving $10 billion in cumulative performance EBITDA. These targets represent a monumental challenge given the company's recent financial struggles.
| Current vs Target Metrics: | Current Status | Target Requirements |
|---|---|---|
| Market Capitalization: | $9.26 billion | $100 billion |
| Revenue Trend: | Down 35% since 2022 | Significant growth required |
| Stock Performance: | Down 80% from 2021 highs | Substantial recovery needed |
| Cumulative EBITDA Target: | Not specified | $10 billion |
GameStop faces substantial headwinds as gamers increasingly shift to online purchases, contributing to the company's revenue decline of more than 35% since 2022. The stock price has fallen 80% from all-time highs reached during the 2021 meme-stock rally when the company achieved a record market capitalization of approximately $34 billion.
Compensation Structure and Terms
Cohen's compensation package eliminates traditional guaranteed pay elements entirely. The CEO will receive no salary, cash bonuses, or conventional stock options under the new arrangement. Instead, the package consists of stock options to purchase more than 171.5 million GameStop shares at $20.66 per share, with an exercise cost of approximately $3.5 billion.
| Package Components: | Details |
|---|---|
| Total Award Value: | $35 billion |
| Exercise Cost: | $3.5 billion |
| Share Options: | 171.5 million shares |
| Strike Price: | $20.66 per share |
| Guaranteed Compensation: | None |
| Structure: | Nine performance tranches |
The award is divided into nine tranches, with each tranche eligible to vest only after achieving specific performance goals. This structure ensures Cohen's compensation directly correlates with shareholder value creation and company performance improvements.
Leadership Background and Market Response
Cohen joined GameStop's board in January 2021 and assumed the CEO role in September 2023. The billionaire investor, who serves as the company's second-largest shareholder with an 8.3% stake, has guided GameStop through a challenging period marked by aggressive cost-cutting measures, including closing hundreds of stores to return the company to profitability.
GameStop shares rose more than 4% in early trading following the announcement, with the stock becoming the second-top trending name on Stocktwits, a platform popular among individual investors. The compensation plan draws comparisons to Elon Musk's Tesla incentive structure, where compensation ties entirely to ambitious market value targets and operating profit goals.
Approval Process and Timeline
GameStop's board has reached agreement with Cohen on the compensation award terms. However, shareholders must approve the package at a special meeting expected to occur in March or April. The shareholder vote will determine whether this performance-based approach to executive compensation moves forward, potentially setting a precedent for similar arrangements in the retail gaming sector.
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