GameStop’s CEO sacrificed pay. It could impact the effort to buy eBay

GameStop CEO Ryan Cohen reminded Wall Street this week that he’s still serious about buying eBay. But he still didn’t make clear how he can do it.

The video game retailer, which became the world’s most famous meme stock in 2021, said Tuesday that its board granted a request from Cohen to withdraw a proposed bonus plan that could have paid him as much as $35 billion if he hit certain performance metrics.

It was the company’s first major update regarding its pursuit of eBay since May, when Cohen unveiled his audacious bid to buy the e-commerce company for $56 billion. EBay’s board rejected the proposal soon after, calling it “neither credible nor attractive,” a sentiment that was shared by the broader market given GameStop’s market cap of roughly $10 billion.

Cohen, who became GameStop’s CEO in 2023 and steered the company to profitability through aggressive cost cuts, has done little to satisfy the skeptics. GameStop said at the time of the proposal that it had lined up a $20 billion financing letter from TD Bank, but didn’t say how it would address the remaining funding gap.

In a combative interview with CNBC, Cohen said the company was offering half cash and half stock, with “the ability to issue stock in order to get the deal done.” The shares sank 10% on the day of the announcement and have trended lower since.

Now Cohen is returning to the matter by scrapping a bonus plan that was announced in January. One of the requirements to reach the full $35 billion payout was lifting GameStop’s market cap to $100 billion.

“Mr. Cohen stated that he wants leadership fully focused on GameStop’s operating performance and its proposed eBay acquisition,” the company wrote in Tuesday’s statement. GameStop said it would release a “detailed presentation” about the strategic rationale and operational plan behind its eBay offer this week. 

Eden Chen, a former scout for venture firm Andreessen Horowitz and CEO of gaming software company FirstLook, said that by nixing the bonus, Cohen is at least removing the concern that he wants to do the deal as a way to get his bonus.

“His pay package was tied to getting a certain market cap, and if he merged with a much larger company, conceivably that would get him there quickly,” Chen said. GameStop wrote in its release Tuesday that the company hadn’t decided to pursue the eBay deal when its board approved the pay package.

Still, Chen said, Cohen hasn’t resolved the larger question of “How does a $10 billion company take over a $50 billion company?”

GameStop didn’t respond to a request for comment.