GameStop's Ryan Cohen relinquishes a compensation package valued at as much as $35 billion in pursuit of eBay.

      Ryan Cohen has requested that GameStop’s board retract the performance-based stock award initially proposed for him in January, which analysts had estimated could be worth as much as $35 billion if all milestones were achieved. Cohen, who serves as both chairman and chief executive without a salary, expressed the desire for the company’s leadership to concentrate on its operational performance and the potential acquisition of eBay. At the time the board approved the award, GameStop had not made a decision to pursue eBay.

      The precise language is important, as the news has been simplified in a way that could be misleading. Cohen has not relinquished any money that he has already received. The award was still just a proposal and not an actual grant; it required shareholder approval at the upcoming annual meeting on July 7, and Cohen has now asked the board to withdraw it from the proxy ahead of that vote. Summaries describing him as forgoing or rejecting $35 billion are reasonable, but the amount represents a theoretical upper limit rather than actual money he discarded.

      What the award entailed is the more intriguing aspect. The package included options for 171.5 million shares at an exercise price of $20.66, divided into nine tranches, each vesting only if GameStop met both a market capitalization threshold and a cumulative EBITDA target. The first tranche required $2 billion in cumulative EBITDA. The final and most challenging tranche necessitated GameStop achieving a $100 billion market valuation and generating $10 billion in cumulative EBITDA. For context, GameStop's value was around $12 billion before its interest in eBay emerged.

      The structure resembles the all-or-nothing arrangement that some have critically compared to the moonshot compensation plan that Tesla developed for Elon Musk: significant on paper, but contingent on achieving historically unprecedented outcomes. This comparison has dual implications. A package that pays nothing unless shareholders significantly benefit is, in its own right, difficult to contest, which is the justification GameStop’s board presented when it approved the proposal.

      However, it also confines an executive to targeting a specific number, and the number GameStop now seems to be focused on is eBay. The retailer, which meme traders helped save from collapse, has been working on an ambitious bid to acquire eBay, a marketplace that is several times its size. In early May, GameStop made a non-binding offer of $125 per share and has accumulated economic exposure to tens of millions of eBay shares through options.

      In this context, Cohen’s request appears less like a sacrifice and more like strategic preparation for a conflict. A pay proposal of such magnitude, linked to GameStop's independent share price, would be an awkward issue to defend at a shareholder meeting, especially while simultaneously asking those same shareholders, along with eBay’s, to approve a complex cash-and-stock acquisition. Withdrawing it eliminates one potential point of criticism.

      GameStop has stated it will provide more information on the rationale for pursuing eBay this week, including the strategic case and an operational plan for the merged company. None of these procedural changes affect Cohen’s overall gamble. He continues to take no salary, retains a significant equity stake, and stands to benefit considerably if GameStop's value increases, solely through the shares he currently holds rather than through a special option grant.

      In other words, the incentive remains intact; it has just been removed from the list of separate issues that opponents of the eBay acquisition could highlight. eBay has not publicly responded to this approach, and the proposed acquisition remains just that—an unfinalized offer lacking agreed-upon terms, due diligence access, and the typical regulatory and shareholder approvals in the pipeline.

      The annual meeting will proceed on July 7, now with one fewer topic on the agenda. Whether GameStop can achieve the $100 billion value that the withdrawn award would have paid out for is a question that the eBay bid partly aims to answer.