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Ryan Cohen Takes CEO Role at GameStop With No Salary
GameStop has named activist investor and Chewy co-founder Ryan Cohen to the role of president and CEO on top of his existing position as chairman of the board of directors. Cohen, who is taking the reins at the company three months after CEO Matt Furlong was fired, will forgo a salary — but his new position will give him a large amount of leverage in terms of pushing his goals for the ailing retailer.
Cohen has been involved with operations at GameStop for over a year, most notably when he reportedly spearheaded the firing of CFO Mike Recupero in July 2022 on the grounds that he was “not the right culture fit” and “too hands off,” a person familiar with the matter told CNBC. The move was made at the same time as layoffs due to the company “making a number of reductions to help us keep things simple and operate nimbly with the right talent in place,” according to an internal memo.
While GameStop has been struggling for some time, it seems to have stabilized in its latest quarter. Net sales were $1.164 billion for Q2 2023, compared to $1.136 billion for Q2 2022, and its net loss shrank to $2.8 million from $108.7 million during the same period in the previous year.
However, smaller losses are not growth, and GameStop has yet to prove that its business model makes sense in an increasingly digital world. The retailer has attempted to tap into modern online trends through moves such as the launch of an NFT marketplace in July 2022, but that gamble likely didn’t pay off. A recent study found that as many as 95% of NFTs are now effectively worthless, according to Business Insider.
While Cohen has not made any plans for GameStop public — the announcement of his appointment was two sentences long — his actions at other companies imply that he may push for a sale of GameStop’s more valuable assets or otherwise look to maximize value while shedding less profitable aspects.
Cohen was a vocal supporter of the sale of BuyBuy Baby after he took a 9.8% stake in Bed Bath & Beyond in March 2022. However, he sold his stake in August 2022 following a bump in stock prices created by the short-lived “meme stock” craze, a move that earned scrutiny from the SEC, according to The Wall Street Journal.
Additionally, Cohen reportedly took a large stake in Nordstrom in February 2023 in preparation of pushing cost cuts through a “targeted board refresh” at the luxury retailer, according to The Wall Street Journal. He is also using a significant stake in Alibaba to push for increased and sped-up share buybacks at the company, according to Reuters.
Discussion Questions
Why do you think Ryan Cohen is taking on the CEO role without pay? What are Coehn’s long-term goals for GameStop?
Poll
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Karen S. Herman
CEO and Disruptive Retail Specialist, Gustie Creative LLC
Jeff Hall
President, Second To None
It’s been interesting to watch the twists and turns at GameStop. Only Ryan Cohen can speak to his motivations about getting paid, but I doubt it has anything to do with altruism or his desire to set an example for the team. It’s one thing to sit on the board as an activist investor, but it’s an entirely different proposition to take the lead role and operate the company – it’s not as easy as it looks. And while the business is showing modest signs of progress, it’s still a long way from being as financially successful as it once was. As for the long-term, I suspect that Cohen’s goal for GameStop is to improve financial results enough to drive up the valuation of the company so that he can exit with a substantial gain.
When I see executives forego a salary, my assumptions are generally that they:
He’s got to figure out how to get his money (capital) back somehow, and a salary is going to be but a drop in the bucket. However, the recent examples of major investors/owners coming in and taking over (ahem, Elon Musk) don’t exactly set a good precedent for success. But for Cohen, I’m actually surprised it took this long. I thought this was going to be his play from the beginning, following the playbook at Chewy.
Didn’t Elon Musk forgo taking a salary? Worked out pretty well for him.
Clearly the gaming landscape is taking shape online and in the metaverse. Offline brick and mortar has to be disrupted. This move by GameStop to put an activist investor in the role of president and CEO is a gamechanger. Ryan Cohen has proven to be a hands-on leader and I think he will carve a new path for GameStop that reimagines gaming in brick and mortar that embraces AR and VR, building brand extensions online and in the metaverse. It’s a tech triple play.
While he took the job for no pay, he did not take the position with no upside. An investor like Cohen does not just do something like this without first evaluating the personal upside which I am certain there is a LOT of. Fix the easy problems, put some lipstick on, sell it….rinse and repeat.
There are activist investors, then there are the Ryan Cohen type of activist investors – fully hands on, rolling up their sleeves and making things happen quickly in the trenches on and on the front line. Ryan’s success at Chewy should provide hints as to the playbook and roadmap he will put in place at GameStop – respecting their will be nuances in how it all plays out.
I was upbeat, then four words in… There’s no mystery as to the “without pay” angle: in case you have too little imagination to figure it out, an answer was provided (“new position will give him a large amount of leverage in terms of pushing his goals for the ailing retailer”). And what might those goals be, other than the likely one of makng a lot of money for himself?? I don’t know (nor, cynically, am I confident there are any).
The real question is not why Cohen took the job without pay, but rather why Cohen took the job. The without pay portion doesn’t really matter for a billionaire, but it does matter in the land of public opinion. The fact is, Cohen is a turnaround artist and that means difficult tasks including layoffs, sales, positioning, legal haranguing and debt negotiation. For anyone who is in the turnaround space, this leaves one item of concern off the docket.
As for taking the job- Cohen has an opportunity to influence a brand, market, and the gaming sector through an influential retailer- plus make money while doing it. Successful turnarounds, whether resulting in liquidation, buyout, or recovery tend to offer high value for certain parties, depending on where they sit. Cohen is looking to control this outcome for his and possibly GameStops benefit.