April 29, 2021
Reuters – How a sweetheart deal gives GameStop CEO a $179 million goodbye gift
Gamestop Corp chief executive George Sherman can step down this summer with a $179 million windfall that dwarfs CEO salaries at many larger corporations thanks to a sweetheart deal that was turbocharged by this year’s furious meme stock rally, compensation experts said.
GameStop said on Monday that Sherman would step down by July 31. The struggling U.S. videogame retailer has been seeking a new leader to work on its e-commerce transition with chairman Ryan Cohen, the billionaire co-founder and former chief executive of online pet supplies retailer Chewy Inc..
GameStop decoupled some of Sherman’s pay from his performance last year in the early months of the COVID-19 pandemic and granted him stock when its shares were worth a tiny fraction of their current value, according to a Reuters review of security filings and interviews with compensation consultants.
As a condition of his exit, GameStop is speeding up the time frame for Sherman to receive the shares, generating the award.
Sherman, who has been CEO since April 2019, forfeited $98 million worth of stock this month because he did not meet performance targets, GameStop disclosed last week.
Still, he stands to receive a stock payout currently worth $179 million because GameStop granted him more shares linked to his tenure at the company rather than to his performance as most companies do with their CEO, said Eric Hoffmann, a vice president at compensation consultant Farient Advisors LLC.
“Investors like awards that are performance-based, that have hard pre-established financial goals that the executives have to meet to earn, as opposed to time-based shares, where they just have to hang on to get them,” Hoffmann said.