Gamestop Corp (GME.N) CEO George Sherman may step down this summer with a $ 179 million heart, lowering the CEO’s salaries for many larger corporations, thanks to a love deal that was fueled by the furious rally of this year’s meme actions, compensation experts said.
GameStop said Monday that Sherman will resign by July 31. The American video game retailer is looking for a new leader looking for a new leader to work on his e-commerce transition with President Ryan Cohen, the billionaire’s co-founder and former executive director of online pet supply. distributor Chewy Inc (CHWY.N).
GameStop decoupled some of Sherman’s compensation from his performance last year in the early months of the COVID-19 pandemic and gave him shares when his shares were worth a small portion of their current value, according to a Reuters review of security documents and compensation interviews. consultants.
As a condition of his release, GameStop speeds up the time for Sherman to receive the shares, generating the prize.
Sherman, who has been CEO since April 2019, lost $ 98 million in shares this month because it failed to meet performance targets, GameStop revealed last week.
However, he will currently receive a $ 179 million share payment, as GameStop has granted him more shares related to his tenure at the company, rather than his performance, as most companies do with their CEO, said Eric Hoffmann, vice president of clearing consultant Farient Advisors LLC.
“Investors like performance-based awards, which have predetermined financial goals, that executives have to meet in order to win them, as opposed to time-based actions, where they just have to cling to get them,” Hoffmann said. .
A GameStop spokesman 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 amount of Sherman’s compensation exceeds the annual salaries paid to many US CEOs. ViacomCBS Inc. (VIAC.O) CEO Joseph Ianniello earned $ 112.9 million in salary in 2019, while Jamie Dimon’s 2019 JPMorgan Chase & Co (JPM.N) salary reached $ 107.8 million, according to the latest balance sheet of the corporate governance data provider CGLytics.
Other GameStop employees will not participate in Sherman’s contingency. The retailer has closed hundreds of stores, according to securities disclosures.
GameStop shares closed at $ 158.53 on Tuesday, a stratospheric increase from about $ 5 last summer, when the company gave most of its shareholding to Sherman. They rose in January, while individual traders on Reddit and other social platforms broke them, squeezing short sellers.
Reuters reported last year how some companies were protecting executives from the financial downturn of the pandemic, moving from performance-based payments to time-based payments. They argued that the market disruption made it difficult to meet financial targets, and Sherman will benefit from this trend.
Sherman, 59, was credited internally with cutting costs and led GameStop through the pandemic that took other retailers out, Reuters reported last week.
But his 25 years of experience have been largely with brick retailers such as Advance Auto Parts Inc (AAP.N) and Home Depot Inc (HD.N). Cohen wants a top executive with better skills for the digital transformation of GameStop, Reuters reported.
DOCUMENTATION OF ACTIONS
GameStop granted Sherman about 925,000 shares in June last year, which it was supposed to receive in thirds over three years, according to regulatory documents.
He is ready to receive them all once he leaves under a “transitional agreement” negotiated this month, as well as about 200,000 additional shares that had not been invested previously, the documents show. The records do not reveal how the GameStop board decided on these awards.
Sherman also received 308,477 shares awarded in June last year, related to its performance, separated from the shares it lost last week. He also agreed to give up performance-based actions, according to one of the records. It was not clear if he would achieve the performance goals.
GameStop said Sherman intends to remain on the board without pay to help the future CEO step down.
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