GameStop CEO Ryan Cohen's Potential $35 Billion Incentive Plan
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 17h ago
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Source: Fool
- Incentive Plan Overview: GameStop has announced a long-term performance award plan for CEO Ryan Cohen, which could yield up to $35 billion in stock options if he meets specific EBITDA and market cap targets.
- Financial Goals Requirement: To fully earn the award, Cohen must drive GameStop's EBITDA to $10 billion and increase its market cap to $100 billion, while the company currently reports only $136 million in EBITDA and a market cap of approximately $10.3 billion.
- Performance Improvement Status: GameStop has significantly improved its financial profile by reducing its brick-and-mortar footprint and expanding its collectibles business, which now accounts for 28% of total revenue, although software sales have seen a notable decline.
- Market Valuation Analysis: While Cohen's incentive may attract investors, GameStop's current P/E ratio stands at 27 times, raising concerns about investment value given the instability in its primary revenue-generating businesses.
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About GME
GameStop Corp. offers games and entertainment products through its stores and ecommerce platforms. The Company operates in four geographic segments: United States, Canada, Australia and Europe. Each segment consists primarily of retail operations, with the significant majority focused on games, entertainment products and technology. The Company has a total of approximately 3,203 stores across all of its segments: 2,325 in the United States, 193 in Canada, 374 in Australia, and 311 in Europe. Its stores and ecommerce sites operate primarily under the names GameStop, EB Games and Micromania. Its Australia and Europe segments also include 38 pop culture-themed stores selling collectibles, apparel, gadgets, electronics, toys and other retail products for technology enthusiasts and general consumers in international markets operating under the Zing Pop Culture brand. Its retail stores are generally located in strip centers, shopping malls and pedestrian areas.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
