Can Ryan Cohen's $35 Billion Incentive Plan Transform GameStop Into a Trillion-Dollar Vision?

GameStop’s board of directors recently unveiled an ambitious compensation structure for CEO Ryan Cohen, potentially worth up to $35 billion if he achieves extraordinary financial targets. This groundbreaking move mirrors Tesla’s approach to retaining visionary leadership, and it raises critical questions about whether the gaming retailer can truly deliver on such lofty expectations.

The Stakes: A Performance-Based Wager on Ryan Cohen

The incentive plan grants Ryan Cohen stock options to purchase approximately 171.5 million GameStop shares at $20.66 per share—representing over $3.5 billion in potential value. However, the real opportunity lies in the tiered structure. To unlock the complete $35 billion award, Cohen must orchestrate a dramatic transformation: achieving $10 billion in annual EBITDA while propelling GameStop’s market capitalization to $100 billion.

The plan is structured in tranches, with the first milestone releasing 10% of the award when GameStop reaches a $20 billion market cap and generates $2 billion in EBITDA. This approach ensures Ryan Cohen remains laser-focused on measurable financial outcomes rather than abstract corporate objectives. Notably, Cohen receives no guaranteed salary, cash bonuses, or time-vested stock—his compensation is entirely performance-dependent, aligning his interests completely with shareholder success.

Comparing CEO Incentive Models: Tesla’s Precedent

This structure echoes Elon Musk’s compensation arrangement at Tesla, where shareholders approved a potentially $1 trillion pay package tied to aggressive financial and operational goals. Both arrangements operate on the same principle: exceptional leadership deserves exceptional rewards only if exceptional results materialize. For Ryan Cohen, the challenge is steeper—he must transform a struggling brick-and-mortar retailer into a powerhouse generating $10 billion in annual profit.

Operational Progress: Mixed Signals in the Turnaround

Through 2025, GameStop demonstrated measurable improvement in several areas. The collectibles business emerged as a bright spot, now accounting for nearly 28% of total revenue and driving meaningful sales growth. Management successfully reduced the physical store footprint, lowering operating costs while expanding higher-margin categories.

However, progress remains uneven. GameStop’s hardware business—historically its largest segment—continues declining, though at a slower rate than before. More concerning is the software division, which has experienced significant contraction as digital distribution supplants physical game sales. These two business lines combined still represent over 70% of total revenue, making their stabilization critical to reaching the $10 billion EBITDA target.

The financial improvements are real: operating cash flow, EBITDA, and earnings all strengthened through 2025. Yet transforming a $136 million annual EBITDA into a $10 billion enterprise requires more than operational efficiency—it demands strategic innovation that remains elusive.

The Valuation Conundrum: Can Fundamentals Justify Current Pricing?

Here’s where the investment thesis becomes problematic. GameStop currently trades at approximately 27 times its annualized 2025 earnings, a valuation premium that demands exceptional near-term execution. For a company still struggling to stabilize revenue across its largest business segments, this multiple feels divorced from fundamental reality.

GameStop will perpetually carry an element of retail investor enthusiasm that creates price volatility—a characteristic unrelated to underlying business performance. This phenomenon adds speculative appeal but also significant risk. Even acknowledging Ryan Cohen’s demonstrated capability as a leader and his personal 9% ownership stake in the company, the fundamental case for near-term gains appears weak.

The Investment Verdict: Caution Remains Warranted

The Ryan Cohen incentive plan undoubtedly signals board confidence in his vision and aligns compensation with value creation in unprecedented ways. Yet structural improvements and ambitious compensation targets cannot overcome the challenge of fundamentally revitalizing a mature retail business in digital-first markets.

For investors evaluating GameStop today, the risk-reward calculation tilts toward skepticism. The stock’s current valuation presumes multiple years of exceptional execution—execution that remains theoretical rather than proven at scale. While Cohen’s leadership track record inspires confidence, even capable executives face constraints imposed by market dynamics and competitive realities.

Those considering GameStop should recognize that the $35 billion incentive plan represents a bet on visionary transformation, not a guarantee of investment returns.