GameStop $GME CEO Ryan Cohen has withdrawn a bonus plan that could have paid him as much as $35 billion, saying he wants the company's leadership to be focused on operating performance and its proposed acquisition of eBay.
GameStop added that it will release additional materials regarding its proposed eBay buyout this week. Among the disclosures planned for this week, GameStop said, are a detailed presentation laying out the case for the deal and a plan for how the two businesses would operate together after a combination. An eBay spokesman had no comment on GameStop's statement, according to Reuters.
To qualify for the award, which was introduced in January, GameStop would have needed to hit a market cap of $100 billion and post $10 billion in EBITDA, Bloomberg reported. GameStop said that when its board approved the pay plan, it had not yet decided to pursue eBay. In a separate filing Tuesday, the company said the bonus plan's terms would have been adjusted had GameStop used stock to fund an acquisition.
Last week, an investor filed a proposed class-action suit in Delaware's Chancery Court seeking to halt the pay package until shareholders received fuller disclosures. The company pushed back on the litigation, telling shareholders it had no legal basis and that GameStop intended to fight it. The company's annual shareholder meeting is scheduled for July 7.
GameStop put forward a non-binding proposal in May to acquire all of eBay's outstanding shares at $125 apiece, split evenly between cash and GameStop stock, placing eBay's equity value at roughly $55.5 billion. To fund the deal, Cohen pointed to approximately $9.4 billion in cash on GameStop's balance sheet and up to $20 billion in debt backed by a commitment letter from TD Securities. Cohen said he envisioned leading the merged company as chief executive while forgoing salary and cash bonuses in favor of performance-based pay.
eBay's board rejected the proposal, calling it "neither credible nor attractive" and citing doubts about the financing plan's viability alongside concerns about GameStop's governance structure and executive pay incentives. GameStop, which carries a market value of nearly $10 billion, is seeking to acquire a company roughly five times its size, a gap that has puzzled investors and analysts about where the remaining funding would come from.
In its most recent quarterly report, GameStop said net sales for the three months ending May 2 totaled $835.3 million, up from $732.4 million in the same period last year, a gain of roughly 14%. Directors signed off on a new program to buy back up to $2 billion in shares.