GameStop has crafted a bold, high-risk equity incentive plan for its Chairman and CEO, Ryan Cohen, aimed at rewarding him only if the video game retailer's stock and profits reach far surpass yet-seen levels.
According to a statement released on Wednesday, the GameStop board granted Cohen performance-based stock options linked to soaring targets of a $100 billion market capitalization and $10 billion in cumulative earnings before interest, taxes, depreciation, and amortization (EBITDA).
Under this ambitious plan, Cohen's rewards are contingent upon meeting minimum benchmarks. The plan leaves no room for partial attainmentâtargets must be fully met for any options to vest. Specifically, if GameStop does not achieve at least a $20 billion market capitalization and $2 billion in cumulative EBITDA, none of the options will be accessible to Cohen.
GameStop shares plummeted by 36% last year, with the company currently holding a market cap of $9.3 billion. It reported a net income of $77.1 million during the third quarter.
If Cohen successfully meets these stringent goals, he will be awarded stock options to purchase 171,537,327 shares of GameStop's Class A common stock at $20.66 per share.
Cohen, who joined the board in January 2021 and later became CEO, plays a pivotal role in steering GameStop's transformative journey post the meme-stock craze.
The company has initiated several strategies to broaden its horizons beyond traditional video-game sales, venturing into collectibles, trading cards, and aggressive bitcoin acquisitions with corporate funds. Yet, a definitive strategy for translating these endeavors into growth levels hinted at by Cohenâs compensation targets remains undisclosed.
GameStop stated that this compensation plan is designed to directly align Cohen's incentives with long-term shareholder returns, by tying his compensation solely to what it described as "extraordinary growth."