GME stock today: GameStop shares jumped more than 6% on Wednesday after the videogame retailer unveiled a sweeping, performance-based compensation plan for CEO Ryan Cohen that ties his pay entirely to a dramatic turnaround of the company, as per a report.

GME stock jumps today after CEO Ryan Cohen’s new compensation plan

The new package, valued at roughly $35 billion, is structured around ambitious goals that would require Cohen to lift GameStop’s market value more than tenfold and significantly increase profits. Under the plan, Cohen would need to grow the company’s market capitalization to $100 billion and deliver $10 billion in cumulative performance EBITDA to unlock the full award, as per a Reuters report.

Investors reacted positively to the announcement. GameStop stock rose more than 6% in early trading, and the shares quickly became one of the most talked-about names on Stocktwits, a platform popular with retail traders, reported Reuters.

The targets underscore how much GameStop’s business would need to change. The company, once a centerpiece of the pandemic-era meme stock rally, has struggled in recent years as gamers increasingly shift to online purchases.

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GameStop’s revenue down 35% since 2022 as online competition rises

GameStop’s annual revenue has fallen more than 35% since 2022, and its stock price remains about 80% below its 2021 peak, as per the Reuters report. The company currently has a market capitalization of about $9.26 billion, far below the roughly $34 billion valuation it reached during the meme stock surge.

GME CEO must grow GameStop market cap to $100 billion to unlock full award

Unlike traditional executive pay packages, Cohen’s compensation includes no guaranteed salary, cash bonuses, or stock grants. Instead, the award consists entirely of stock options allowing him to purchase more than 171.5 million GameStop shares at $20.66 each. Based on Reuters calculations, hitting the market value target would translate into an award worth nearly $35 billion, excluding an estimated $3.5 billion exercise cost.

Cohen’s personal stake in the company adds another layer to the market’s reaction. He is GameStop’s second-largest shareholder, owning about 8.3% of the company, according to LSEG data, meaning any significant rise in the stock would benefit him beyond the new pay plan.

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He joined GameStop’s board in January 2021 and became CEO in September 2023. Since then, he has overseen a return to profitability driven largely by aggressive cost-cutting measures, including the closure of hundreds of stores.

GameStop said the compensation package is divided into nine tranches, each tied to specific performance milestones, as per the Reuters report. The company’s board has already reached an agreement with Cohen on the plan, but shareholders will have the final say. Investors are expected to vote on the proposal at a special meeting scheduled for March or April.

FAQs

Why did GameStop shares rise today?
Investors reacted positively to CEO Ryan Cohen’s new $35 billion, performance-based pay plan.

What makes Cohen’s compensation plan unusual?
He will not get a guaranteed pay in the form of salary, cash bonuses or stock options under the package.