GameStop CEO Withdraws $35 Billion Pay Package to Focus on eBay Acquisition
In Focus
- The GameStop board approved the Ryan Cohen’s stock award in January
- GameStop submitted an unsolicited bid to acquire eBay last month
- eBay rejected the half cash, half stock bid
- Cohen needs eBay scale to build a digital marketplace for in-game items
GameStop CEO and Chairman Ryan Cohen has asked the board to withdraw a performance-based stock award proposed for him in January. The move comes as GameStop seeks to acquire eBay. The pay package would have been valued at $35 billion if all targets were achieved.
The GameStop board approved the request and filed an amended proxy statement with the Securities and Exchange Commission.
Why Did Ryan Cohen Withdraw his Pay Package?
Cohen’s pay package withdrawal marks a shift in GameStop’s strategic direction. The CEO said he wants the company to focus on improving the business and completing the planned acquisition.
GameStop had not yet decided to pursue the eBay deal when the board approved the pay package. Cohen does not take a salary from GameStop. The performance award would only have materialized if GameStop’s valuation reached $100 billion and the company generated $10 billion in cumulative EBITDA.
By giving up the proposed award, Cohen eliminates potential governance issues that could arise from GameStop’s bid to acquire eBay ahead of the company’s annual shareholder meeting on July 7. Shareholders were to vote on the pay package proposal during the annual meeting.
What Was GameStop’s Bid to Acquire eBay?
GameStop submitted an unsolicited bid to acquire eBay for $56 billion in early May. The offer included $125 per share in cash and GameStop stock. Investors and analysts expressed doubt that the deal would work.
Cohen continued to pressure eBay during the takeover campaign and criticized its $2.4 billion marketing spend. In response, eBay suspended Cohen’s account, a move that escalated the acquisition stunt into a public clash.
After reviewing Ryan Cohen’s bid, the eBay board rejected GameStop’s takeover bid saying the financial offer was unattractive. GameStop will be seeking shareholder approval to takeover eBay in the upcoming annual meeting. But for eBay, there are no agreed terms or due diligence access.
GameStop will be releasing details about its strategic rationale, operational plan, and financing structure for the combined company this week.
What Does eBay Acquisition Mean for GameStop?
Ryan Cohen plans to build a digital marketplace for in-game items. In this marketplace, virtual assets can be traded for real-world value. To him, the marketplace would be an opportunity to capitalize on the fast-growing secondary gaming market that is mostly closed today.
Cohen needs eBay’s scale, a solid payment infrastructure, and an established seller network, to realize this plan. Market sentiment remains cautious, with prediction platform Polymarket pricing only a 14% chance of completion. GameStop’s strategic presentation will be a clear signal of whether the company’s eBay takeover proposal is moving toward formal negotiations.
