Gamestop Corp (GME.N) chief executive George Sherman may step down this summer with a $ 179 million contingency that exceeds the CEO salaries of many larger companies thanks to a caring deal that was turbocharged by the furious concentration of memes this year, compensation experts said.
GameStop said Monday that Sherman would step down on July 31st. The American video game retailer has been looking for a new leader to work on the e-commerce transition with President Ryan Cohen, the billionaire co-founder and former CEO of online pet supplies. Chewy Distributor Inc. (CHWY.N).
GameStop detached part of Sherman’s pay from his performance last year during the early months of the COVID-19 pandemic and granted him shares when his shares were worth a small fraction of their current value, according to a Reuters review on security files and interviews with compensation consultants.
As a condition of its release, GameStop is speeding up the deadline for Sherman to receive the shares, generating the prize.
Sherman, who has been CEO since April 2019, lost $ 98 million worth of shares this month because he failed to meet performance targets, GameStop revealed last week.
However, he will receive a share payment of current value of $ 179 million because GameStop granted him more shares related to his tenure in the company and not to his performance, as most companies do with their CEO, said Eric Hoffmann, vice president of clearing consulting for Farient Advisors LLC.
“Investors like performance-based rewards, which have pre-set financial goals that executives have to meet in order to earn, rather than time-based stocks, where they just have to stay,” Hoffmann said. .
A GameStop spokesman, based in Grapevine, Texas, declined to comment. Sherman did not respond to requests for comment. Cohen, GameStop’s largest shareholder with a 13% stake, could not be reached for comment.
The value of Sherman’s severance pay exceeds the annual salaries granted to many CEOs in the United States. ViacomCBS Inc. (VIAC.O) CEO Joseph Ianniello took home $ 112.9 million in salary made in 2019, while the salary made by JPMorgan Chase & Co (JPM.N) by Jamie Dimon in 2019 reached $ 107.8 million, according to the most recent count of the corporate governance data provider. CGLytics.
The rest of the GameStop employees will not participate in the spirit of Sherman. The retailer has closed hundreds of stores, according to the disclosure of stocks.
Shares of GameStop closed at $ 158.53 on Tuesday, a stratospheric rise from about $ 5 last summer, when the company granted most of the share allotment to Sherman. They fired up in January when individual Reddit marketers and other social media platforms pushed them forward, squeezing short-term marketers.
Reuters reported last year on how some companies were protecting executives from the financial downturn of the pandemic by moving from performance-based and time-based payments. They reasoned that market disruption made it difficult to achieve financial goals and Sherman will benefit from this trend.
Sherman, 59, has been internally accredited to cut costs and run GameStop through the pandemic that left other retailers out of business, Reuters reported last week.
But his 25 years of experience have been largely with brick and mortar retailers such as Advance Auto Parts Inc (AAP.N) and Home Depot Inc (HD.N). Cohen wants a senior executive with better skills for GameStop’s digital transformation, Reuters reported.
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GameStop granted Sherman approximately 925,000 shares last June that it was to receive in thirds for three years, according to regulatory records.
It is ready to receive them all at once upon its departure under the terms of a “transition agreement” negotiated this month, as well as approximately 200,000 more shares that it had not previously acquired, according to data presented. The presentations do not reveal how GameStop’s board decided on these awards.
Sherman also finally received 308,477 shares awarded last June related to its performance, in addition to the shares it lost last week. He also agreed to give up these performance-based actions, shows one of the presentations. It was unclear if he would have met the performance targets.
GameStop has said Sherman plans to remain on the unpaid board to help the next CEO move on to the role.
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