GameStop has laid out a a massive, all-or-nothing equity incentive for Chairman and CEO Ryan Cohen that will only pay out if the video game retailer’s stock and profits soar to levels far beyond anything it has achieved to date.
The board of GameStop granted Cohen performance-based stock options tied to a $100 billion market-capitalization target and $10 billion in cumulative earnings before interest, taxes, depreciation and amortization, according to a statement released Wednesday.
Under the terms of the plan, Cohen receives nothing unless the minimum thresholds are met, and there is no partial credit if targets are missed. If GameStop fails to reach at least $20 billion in market capitalization and $2 billion in cumulative EBITDA, none of the options will vest.
GameStop shares slid 36% last year and the company currently has a market cap of $9.3 billion. The company reported a net income of $77.1 million in the third quarter.
If Cohen hits the goals, the total award will be for stock options to purchase 171,537,327 shares of GameStop’s Class A common stock at a price of $20.66 per share.
Cohen, who joined the board in January 2021 and later became CEO, has been the central figure in GameStop’s post-meme-stock transformation.
The company has made a few moves aimed at broadening its business beyond physical video-game sales, including an expansion into collectibles, trading cards as well as buying bitcoin aggressively with its corporate cash. What remains absent, however, is a clear master plan for how those initiatives translate into the scale of growth implied by the compensation targets.
The compensation structure, the company said, is intended to align Cohen’s incentives directly with long-term shareholder returns by tying his compensation entirely to what it called “extraordinary growth.”
