In what may be one of the most lucrative dismissals in the history of corporate executives, four executives from GameStop are leaving with vested shares valued at approximately $290 million, despite three of them joining the company in 2019. This follows a severance agreement that allows shares granted during their tenure to vest upon departure, including for CEO George Sherman. While such treatment of leadership transitions isn't uncommon, they will exit with shares at historically high levels, according to Fox News and reported by Al Arabiya.
GameStop's shares closed at $151.18 on Friday, having peaked at $483 in late January after ending 2020 at just $19. The wealth potential for these executives, based on a Wall Street Journal analysis of GameStop disclosures, reflects the rapid and unusual increase in the company's market value, particularly as it became popular among individual investors during a transformation led by activist investor and Chewy co-founder Ryan Cohen.
Sherman will step down by July 31, and the company is seeking a replacement. His exit agreement calls for the immediate vesting of over 1.1 million shares worth an estimated $169 million as of Friday's close. Sherman's severance package could have been higher. According to his separation agreement, he agreed to forfeit at least $5 million in cash and shares estimated at around $47 million, in addition to additional stock awards.
Former CFO James Bell will receive shares worth $43.6 million, while Chief Customer Officer Frank Hamlin, who resigned last month, will obtain shares valued at $33.5 million. The company’s Chief Operating Officer, Chris Homeister, plans to resign due to reduced responsibilities and is set to receive nearly 289,000 shares worth approximately $43.6 million as of Friday.
Additional Gains
Bell, Hamlin, and Homeister could earn further shares under their employment agreements based on the company's performance this year, according to GameStop filings. Sherman joined GameStop in April 2019 after the company's failure to find a buyer. He became the fifth CEO since 2017, pledging to change the direction of the retailer.
During his tenure, GameStop managed to reduce its costs and debt, though it faced challenges, with revenues declining to nearly $5.1 billion for the year ending January 30, down from $6.5 billion the previous year. Combined losses exceeded $686 million over the past two fiscal years. To improve its outlook, the company last month appointed Cohen, former CEO of online pet supplies retailer Chewy, to lead a committee focused on making the business more technology-oriented with a greater emphasis on e-commerce. Sherman recently stated that he expects GameStop to benefit from plans to expand the company’s product offerings to reduce its reliance on new console game releases from companies like Sony and Microsoft.
