GameStop Ties CEO Ryan Cohen's Compensation to Ambitious Growth Targets
GameStop has established a performance-based equity incentive plan for Chairman and CEO Ryan Cohen. This compensation is entirely contingent upon the company achieving specific financial and market capitalization benchmarks.
This compensation is entirely contingent upon the company achieving specific financial and market capitalization benchmarks.
Plan Details and Benchmarks
The plan, announced on Wednesday, grants Cohen stock options tied to a $100 billion market capitalization target and $10 billion in cumulative earnings before interest, taxes, depreciation, and amortization (EBITDA). Under the terms, no options will vest unless minimum thresholds of $20 billion in market capitalization and $2 billion in cumulative EBITDA are met. If these minimums are not achieved, Cohen will receive no compensation from this plan.
Current Financial Landscape
GameStop's market capitalization is currently $9.3 billion, following a 36% decline in its share price last year. The company reported a net income of $77.1 million in its third quarter.
Potential Payout
Should the specified goals be met, Cohen would receive stock options to purchase 171,537,327 shares of GameStop's Class A common stock at a price of $20.66 per share.
Cohen's Role and Company Strategy
Cohen, who joined the board in January 2021 and later became CEO, has been a key figure in GameStop's recent evolution. The company has pursued business diversification beyond physical video game sales, including expansion into collectibles, trading cards, and investing corporate cash in Bitcoin.
Alignment with Shareholder Returns
GameStop states that this compensation structure aims to align Cohen's incentives directly with long-term shareholder returns through what it describes as 'extraordinary growth.'