GameStop shareholder sues to halt $35B Ryan Cohen pay vote
In brief
- GameStop shareholder lawsuit filed Monday to halt July 7 vote on CEO Ryan Cohen's $35 billion pay package
- Lawsuit challenges proxy statement and Cohen's voting rights on his 9.3% stake
- Package is performance-based: $35B potential value if GameStop reaches $100B market cap and $10B cumulative EBITDA
The lawsuit and governance concerns
The proposed class action challenges the board's handling of the shareholder vote, citing a misleading proxy statement. At issue is whether Cohen can vote his 9.3% stake and how abstentions will be counted.
GameStop previously indicated that Cohen's shares would be excluded from the vote before reversing course in proxy materials. The complaint argues the changes could allow Cohen and other insiders to determine the outcome with limited support from public investors.
The compensation structure
GameStop announced the performance-based stock option award in January. The package would give Cohen no salary, cash bonus, or time vested stock. Instead, it includes options to buy more than 171.5 million GameStop shares at $20.66 each.
The award could deliver a multibillion dollar windfall if GameStop reaches a $100 billion market capitalization and $10 billion in cumulative performance EBITDA. If all performance targets are met, the package could be worth roughly $35 billion.
GameStop has framed the award as a way to align Cohen's compensation with shareholder returns.
Cohen's role at GameStop
Cohen became one of GameStop's most influential shareholders in 2020. He joined the board in 2021, became chairman later that year, and took over as CEO in 2023.
Earlier this year, eBay rejected Cohen's roughly $56 billion takeover proposal, calling it neither credible nor attractive. The current pay dispute adds another layer of scrutiny to his leadership of the video game retailer.
