GameStop Corp. (GME.N) chairman Ryan Cohen set out to eliminate the corporate surplus as a corporate aircraft, and used the attractiveness to restore the video game retailer to hire Amazon.com Inc. (AMZN.O) Australia boss Matt Furlong for chief executive, according to people familiar with the process.
The role would have come without unnecessary embellishments, but it would have paid off well in GameStop stocks if the turnaround was successful. Most of the compensation based on Furlong’s performance will be tied to share rewards.
This move represents Cohen’s boldest gambit to date in his quest to attract talent from Amazon. GameStop’s market value rose to $ 16 billion from $ 250 million a year ago as amateur traders challenged hedge funds betting on the company and turned it into a popular meme on Reddit and other social media.
Most analysts say the company’s valuation is not entirely in line with the basics of its business, which is a bold bet for anyone recruited in GameStop who accepts variable shares as part of their compensation.
GameStop announced on Wednesday the hiring of Furlong along with that of Amazon’s chief financial officer for North American consumer business, Mike Recupero, as chief financial officer. They were the newest Amazon veterans, invented by Cohen, the billionaire co-founder of online pet retail Chewy Inc. (CHWY.N), who joined the GameStop board in January. Read more
In March, Cohen appointed Amazon CEO Jenna Owens as chief operating officer, a month after bringing in Amazon Web Services’ top engineer Matt Francis as chief technology officer. Another Amazon CEO in the e-commerce giant’s food business, Elliott Wilke, was hired in April as chief growth officer.
Amazon did not respond to a request for comment.
Cohen spent two months talking to more than 50 potential CEO candidates from a number of industries, including games and e-commerce, sources said. Cohen and Furlong had discussed a potential role for him at Chewy more than six years ago, and someone from Cohen’s network referred him back to Furlong as a strong candidate for CEO of GameStop, one source added.
Based in Miami, Cohen called Furlong in Australia and held a series of virtual meetings that later included members of the GameStop board. The job description required repairing the company’s distribution network, deconstructing its website and achieving Cohen’s vision of high-quality customer service, according to sources.
Furlong is expected to spend long hours at work without the privileges of emerging GameStop CEO George Sherman as a company plane and assistants, Cohen told him. While Sherman will remain on GameStop’s board, he is stepping down as chief executive because the board has decided it lacks the necessary expertise in e-commerce, according to sources.
A Sherman spokesman declined to comment.
In discussions with Furlong, Cohen said former GameStop executives were leaving order processing and customer service operations to be dropped, sources said. If Furlong solved these problems, he would be generously rewarded with shares of GameStock.
The full details of Furlong’s compensation package have not yet been revealed by GameStop. The company said in a regulatory statement this week that it would give Furlong shares worth $ 16.5 million over the next four years, as well as a $ 4.7 million entry bonus to be paid over the next two years, in depending on his continuous employment. His annual basic salary will be $ 200,000.
Furlong, 42, was eager for the challenge and was happy to move to GameStop headquarters in Grapevine, Texas, sources said.
Some members of the GameStop board even played on the challenges Furlong will face in turning the company into an Amazon of video games to make sure he’s committed.
“We wanted to find out why you would leave the safety and comfort of your current position, essentially kiss your family goodbye and go in there to build something from scratch,” said one of the sources familiar with the board’s thinking.
Cohen also admitted during the interview process that the transformation would take time, sources said.
GameStop, Cohen and Furlong declined to comment.
“We have a lot of work ahead of us. You won’t find us talking about a big game, making a bunch of high promises or telegraphing our competition strategy, that’s the philosophy we adopted at Chewy,” Cohen told GameStop shareholders at the annual meeting. the company on Wednesday.
FINANCIAL FIRE POWER
It is unclear how long the 35-year-old Cohen will be at GameStop after Furlong takes office on June 21. Cohen is obsessed with customer service, personally calling GameStop customers late at night to ask for feedback, and has pushed for an upgrade of the company’s website and online ordering system, Reuters reported in March. Read more
GameStop said on Wednesday that it continues to make losses, although it reduced its operating loss for the first quarter to $ 40.8 million from $ 108 million a year ago.
Furlong will have a lot of financial firepower to use in his new mission. GameStop has already sold more than $ 550 million in stock since the start of the Reddit rally in January, some of which it had previously repaid, owed and launched a 700,000-square-foot warehouse in York, Pennsylvania. The company said on Wednesday it would seek to sell up to 5 million more shares, currently worth $ 1.1 billion.
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