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Although the GameStop CEO will not be compensated during the transition period, his severance package is quite robust.
The shares of the American video game, consumer electronics, and gaming merchandise retailer, GameStop Corp (NYSE: GME) are seeing slight gains in the Pre-market today, as the firm announced it is on the hunt for a new CEO. According to a filing lodged with the United States Securities and Exchange Commission (SEC), the company said it has entered a “Transition and Separation Agreement,” with its President and Chief Executive Officer, George Sherman.
Per the terms of the agreement, Sherman will be stepping down from his role by July 31 or earlier upon the appointment of a successor. Based on this, the company noted it is in search of a suitable replacement for the ongoing CEO.
“The Board’s Strategic Planning and Capital Allocation Committee is leading a search to identify new Chief Executive Officer candidates with the capabilities and experience to help accelerate the next phase of the Company’s transformation,” the filing reads.
According to reports, the adduced next phase GameStop is exploring relates to its plans to diversify its portfolio into e-commerce, and for that, the best candidate with the right experience is required. Per the transition agreement, Sherman, who became the CEO back in April 2019 will stay on as a director to help the new CEO adapt to his role in the company. This duty, however, comes with no pay as the firm noted he “has declined to receive compensation for his service as a director, both before and after the Separation Date.
Per a CNBC report, GameStop shares jumped more than 8 percent in early trading on Monday following the news. The GME stocks are, however, up 0.77% in the pre-market today and are trading at $159.75 per share.
GameStop CEO to Step Down with a Robust Compensation
Although Sherman will not be compensated during the transition period, his severance package is quite robust as reported by Reuters. The company notably decoupled some of Sherman’s pay from his performance at the early days of the COVID-19 pandemic. Back then, the company offered him some stock which when estimated with the current value of the company’s shares are worth about $179 million.
GameStop shares have seen a meteoric rise in 2021 fueled by a bout of buy-ups from retail investors on the Reddit social media platform, forcing a short squeeze amongst institutional short sellers. Despite the fact that GME is down from its all-time high of around $483 attained earlier in the year, the stock is still up more than 700% in 2021.
Per the reports, Sherman has been commended internally for piloting the affairs of the company during the coronavirus pandemic, a period in which many global firms went under due to a strain in the economy across the board. The compensation has been seen as deserving as George Sherman helped rebalance the firm with cost-cutting initiatives.