Ryan Cohen, the chief executive of GameStop, has given up what could have been the largest personal pay package in the history of the American retail industry. In its place, he is pressing ahead with a takeover bid for eBay that most of Wall Street considers unlikely to succeed and that the target company has already publicly dismissed.
The announcement on Tuesday was brief and deliberately pointed. GameStop confirmed that its board had agreed to remove the performance pay package from the company’s shareholder vote, following a request from Cohen himself. He stated that he wants the company’s leadership to remain fully focused on GameStop’s operating results and its proposed acquisition of eBay. Additional materials setting out the strategic case for the deal are expected later this week.
To appreciate what Cohen has walked away from, it is worth understanding how the pay package worked. GameStop’s board approved it in January of this year. It was structured entirely around performance, meaning Cohen would receive nothing unless the company hit extremely demanding targets over a long period. He would take no salary, no cash bonus and no guaranteed stock. The entire package was tied to the company’s share price reaching levels that would push its total market value as high as $100 billion. If every target were met, the package could ultimately have been worth up to $35 billion in shares. It was, in effect, a bet that Cohen would transform GameStop into a business roughly ten times its current size, and that he would only be paid if he actually did it.
The board approved that arrangement in January without any intention of pursuing eBay. Six weeks later, Cohen had begun quietly buying shares in the online marketplace. By early May, GameStop had accumulated a five per cent stake and submitted a formal proposal to eBay’s board to buy the company outright at $125 per share, split equally between cash and GameStop stock. The total value of the proposal was approximately $55.5 billion.
The response from eBay was not warm. Its board rejected the offer in mid May, describing it in a public statement as neither credible nor attractive. The core of the scepticism was financial: GameStop’s entire market value at the time of the bid was less than $12 billion, making the prospect of it swallowing a company four times its size deeply unconventional. To fund the cash portion, Cohen had obtained a highly confident letter from TD Securities indicating that up to $20 billion in debt financing could be arranged. Even with that letter in hand, the question of where the remaining tens of billions would come from remained unanswered to the satisfaction of analysts or eBay’s directors.
Cohen’s public appearances during the bidding period drew as much attention as the bid itself. An interview on the American financial network CNBC was widely described as combative and at times awkward. He declined to give specific details about the financing, acknowledged he had not spoken to eBay’s management before submitting the proposal, and said he was just starting the process. The interview did little to reassure doubters, and GameStop’s share price fell sharply following its broadcast while eBay’s shares rose modestly.
Despite the rejection, Cohen has not stepped back. Writing in Barron’s in early June, he said plainly that he wanted to own eBay for the long term and described it as a great business that had been poorly managed. In the same publication he laid out the argument that GameStop’s network of roughly 1,600 retail stores across the United States could give eBay a physical presence for authentication, product handling and live selling events, turning the online marketplace into something with a national footprint that none of its competitors could replicate quickly.
The withdrawal of the pay package is being read by observers as a signal that Cohen intends to pursue the eBay bid with considerably more intensity than a company in GameStop’s position would normally be expected to manage. By removing the distraction of a contested shareholder vote over executive pay, and by publicly tying his own priorities to the outcome of the acquisition, Cohen is placing his credibility on the line in a way that goes beyond what a conventional corporate announcement would suggest.
The wider context around GameStop is worth noting. Cohen took over as chief executive in September 2023, having joined the board more than two years earlier. He found a company that had been losing money, closing stores and struggling to adapt to a world where physical video game sales were declining year by year. Under his leadership, GameStop returned to profit through a combination of heavy cost reduction, the closure of hundreds of underperforming locations and a pivot towards selling collectibles alongside games. In the first quarter of this year, the company reported net sales of $835.3 million, up from $732.4 million in the same period a year earlier. Its board also approved a fresh programme to buy back up to $2 billion of its own shares.
Cohen made his name before GameStop by founding Chewy, an online pet supply retailer, in 2011. He built it into one of the largest pet commerce businesses in the United States and sold it to PetSmart in 2017 for $3.35 billion, a transaction that stood for years as the largest e-commerce acquisition in American history. He became a favourite of retail investors when his public criticism of GameStop’s management drew the attention of traders on internet forums, helping to fuel a period in early 2021 when GameStop’s share price rose by roughly 1,500 per cent in two weeks in one of the most chaotic episodes in modern stock market history.
