GameStop follows Tesla's lead by tying its CEO's pay to these 'extraordinary growth' targets

By Emily Bary

GameStop CEO Ryan Cohen would see a huge stock-options package if he can grow the company's market cap by about 1,000% and hit new profit targets

GameStop shareholders will get to vote on a newly announced pay package for CEO Ryan Cohen.

After a disappointing recent stretch for GameStop shares, the company is giving its CEO a chance for a big payday - provided he can achieve ambitious growth targets.

Specifically, CEO Ryan Cohen has to grow the company's market capitalization to $100 billion from $9.3 billion today - an increase of roughly 1,000%. He also has to oversee GameStop (GME) through a period in which it meets hefty profitability goals, or $10 billion in what the company calls "cumulative performance" earnings before interest, taxes, depreciation and amortization (Ebitda).

Turning in that "extraordinary growth" would unlock the full value of newly announced performance-based stock-option awards, which are still subject to a shareholder vote. The plan resembles one recently approved for Tesla (TSLA) CEO Elon Musk, who can receive a $1 trillion award if he meets lofty targets.

See also: Here's what Elon Musk must do to become a Tesla trillionaire

Cohen's total award is made up of options to buy 171,537,327 shares of GameStop for $20.66 each, though it's also split into nine tranches. That means Cohen can unlock lesser awards by hitting lower milestones. For instance, he can get 10% of the award for roughly doubling the company's market cap to $20 billion and hitting a $2 billion "hurdle" for cumulative performance Ebitda.

But failing to meet that bar will leave him with nothing.

"Under the award, Mr. Cohen receives no guaranteed pay - no salary, no cash bonuses, and no stock that vests simply over time," GameStop said in a Wednesday filing. "Instead, his compensation is entirely 'at-risk,' meaning he will only be paid if the company achieves significant market and operational goals."

GameStop said the plan makes it so its CEO's "incentives are directly aligned with creating long-term value for GameStop's stockholders."

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The announcement comes as GameStop shares have shed 38% over the past year.

GameStop noted that the award structure was created by its board of directors and that Cohen recused himself from discussions. The parties came to an agreement about the award on Tuesday, but GameStop shareholders will vote on it during a special meeting that the company aims to hold in March or April.

While Cohen's RC Ventures owns 8.3% of GameStop shares, according to FactSet data, he won't be participating in that vote "so that GameStop's other stockholders have the opportunity to determine the outcome."

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-Emily Bary

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01-07-26 0813ET