George Sherman, the GameStop Corp, Chief Executive, gets a $149 million windfall before getting down this summer. This is not a very easy-go to many other larger corporation’s CEO. Experts said that this sweetheart deal was turbocharged by this year’s furious meme stock rally, compensation.
The company had said that Sherman would get down by July 31. The struggling U.S. videogame retailer has been seeking a new leader. This is to work on its e-commerce transition with chairman Ryan Cohen, the billionaire co-founder and former chief executive of online pet supplies retailer Chewy Inc (CHWY.N).
When its shares were worth a tiny fraction of their current value, GameStop granted Sherman some stocks. Previously it had decoupled some of Sherman’s pay from his performance last year during the pandemic. GameStop is speeding up the time frame for Sherman to receive the shares, generating the award. This is because of his condition of exit is nearing. Since April 2019, Sherman has been the CEO. As he did not meet performance targets, stock worth of $98 million has been fortified this month.
Eric Hoffmann, a vice president at compensation consultant Farient Advisors LLC said that Sherman have received a stock payout currently worth $179 million because GameStop granted him more shares linked to his tenure at the company rather than to his performance. This is followed by most companies with their CEOs. The value of Sherman’s severance payout surpasses annual salaries given to many top U.S. CEOs.
Sherman’s windfall will not be shared by any other employees of GameStop. The retailer has been shuttering hundreds of stores, according to securities disclosures. Due to the pandemic situation last year, some companies were shielding executives from the financial fallout, by moving from performance-based to time-based payouts. They reasoned that the market disruption made it difficult to meet financial targets, and Sherman will benefit from that trend.
GameStop granted Sherman roughly 925,000 shares last June that he was set to receive in thirds over three years, according to regulatory filings. He is set to receive them all at once upon his exit under terms of a “transition agreement” negotiated this month, as well as roughly 200,000 more shares that had not previously vested, the filings show, but it did not disclose how GameStop’s board decided on these awards. His performance share of 308,477 also have been awarded to Sherman. But it is not clear whether he had met the performance target. The company said that Sherman had planned to remain on the board of directors without pay to help the next CEO transition into the role.