GameStop has given Ryan Cohen his own Musk-like comp deal
It looks like it's going to take more than another meme-stock rally for GameStop (GME) CEO Ryan Cohen to really cash in on a big pay day.
Similar to Tesla's (TSLA) board giving CEO Elon Musk a potential trillion-dollar pay package that's based on him meeting aggressive operational and market cap milestones, GameStop on Wednesday announced a new performance-based deal for Cohen.
The compensation package, worth roughly $35 billion, is predicated on Cohen turning around the struggling video-game retailer and meeting "significant performance goals," according to the press release announcing the new long-term performance award.
GameStop's board said that the pay package is designed to incentivize Cohen to "achieve extraordinary growth" for the company. Central to these goals are that GameStop needs to grow to a market cap of $100 billion and achieve $10 billion in cumulative performance EBITDA (earnings before interest, taxes, depreciation and amortization).
GameStop's market cap is currently $9.6 billion. However, the company notes that when Cohen joined the board in 2021, its market cap was $1.3 billion, which means that he's grown stockholder value by 615% during his tenure.
Cohen was named CEO in September 2023.
As part of the new performance award package, Cohen receives no guaranteed pay. This means that he will not receive a salary, cash bonuses or stock that vests over time, making his compensation entirely "at-risk" and contingent on him delivering on the operational goals set forth in his deal.
The total performance award consists of stock options to purchase 171,537,327 shares of the Company's Class A common stock at a price of $20.66 per share.
It is designed to award Cohen for achieving incremental performance goals, so that the first tranche of stock options vests if GameStop achieves a market cap of $20 billion.
He will then receive subsequent tranches for every $10 billion more he adds onto the market cap, up to $100 billion.
The first tranche also requires cumulative performance EBITDA of $2.0 billion, with targets increasing for each subsequent tranche up to a cumulative amount of $10 billion.
A daunting task awaits Cohen
With a net worth of about $5.1 billion, Cohen is in a position to forfeit a salary. However, it remains to be seen how he will be able to generate a turnaround that seems less likely every year.
The company closed 590 stores in 2024 and said in an SEC filing that it had planned to shutter "a significant number of additional stores" in 2025, although it's unclear how many it ended up closing.
But GameStop's pivot to digital and away from its brick-and-mortar stores has yet to pay off for the company. It reported third-quarter revenue of $821 million, falling below analysts' estimates of $987.3 million.
Cohen joined the flood of other corporate leaders to embrace the digital asset treasury (DAT) craze last year, and GameStop currently holds just over $519 million in bitcoin on its balance sheet.
It was a move that economist Peter Schiff dismissed, saying "a company with no viable business plan, has thrown another Hail Mary" after news of the plan was made public.
Schiff is not alone in questioning GameStop's strategy. After having been at the center of the meme stock rally in 2021 that sent its shares up over $500 at its peak, some on Wall Street seem to think it will take another retail-driven rally to send its market cap up again.
In a client note last March, Wedbush analysts said that "despite a complete lack of articulated strategy, GameStop has consistently capitalized on the existence of a 'greater fool'...so far, they've been right."
GameStop's stock rose 3.1% on Wednesday, but has dropped 36.2% over the last 12 months.