GameStop Corp (GME.N) Chairman Ryan Cohen made a point of disposing of corporate profits such as a corporate flight and used the lure to rebuild the video game retailer to recruit Amazon.com Incs (AMZN.O) Australian boss Matt Furlong as the boss, according to People, who are familiar with the process.
The role would come without frills, but it would pay off in GameStop shares if the turnaround was successful. The majority of Furlong’s performance-based compensation will be tied to share allotments.
The move represents Cohen’s boldest gambit yet in his push to attract talent from Amazon. GameStop’s market capitalization has risen to $ 16 billion from $ 250 million a year ago, as amateur traders challenged hedge funds to invest in the company, making it a popular “meme” stock on Reddit and other social media.
Most analysts say the valuation of the company is not in line with the basics of its business, which represents a bold move for any GameStop recruiter who accepts the volatile stock as part of their compensation.
GameStop on Wednesday announced the hiring of Furlong along with Amazon’s North American finance business manager Mike Recupero as CFO. They were the latest Amazon veterans to be poached by Cohen, the billionaire’s co-founder of online pet supply retailer Chewy Inc (CHWY.N), who joined GameStop’s board in January. Read more
In March, Cohen hired Amazon chief operating officer Jenna Owens as Chief Operating Officer, a month after bringing in top Amazon Web Services engineer Matt Francis as Chief Technology Officer. Another Amazon director at the e-commerce giant’s grocery store, 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 variety of industries, including gaming and e-commerce, the sources said. Cohen and Furlong had discussed a potential role for him at Chewy more than six years ago, and someone in Cohen’s network pointed him back to Furlong as a strong CEO candidate for GameStop, one of the sources added.
Based in Miami, Cohen called Furlong in Australia and held a series of virtual meetings that later included GameStop board members. The job description required correcting the company’s distribution network, deconstructing its website and delivering Cohen’s vision of high-touch customer service, according to sources.
It is expected that Furlong will spend many hours on the job without the benefits of outgoing GameStop CEO George Sherman, such as a company plane and managing assistants, Cohen told him. While Sherman remains on GameStop’s board, he leaves the role of CEO because the board decided he lacks the necessary e-commerce expertise, according to sources.
A Sherman representative declined to comment.
In his discussions with Furlong, Cohen said former GameStop executives are letting order processing operations and customer service disappear, sources said. If he went too far in solving these problems, he would be generously rewarded with GameStock shares.
Full details of Furlong’s compensation package have not yet been revealed by GameStop. The company said in a regulatory filing this week that it would provide Furlong GameStop shares worth $ 16.5 million over the next four years, as well as a $ 4.7 million sign-up bonus to be paid over the course of the year. the next two years, depending on his continued employment. His annual base salary is $ 200,000.
Furlong, 42, was eager for the challenge and was happy to move to GameStop headquarters in Grapevine, Texas, sources said.
Some GameStop board members even played the challenges Furlong would face in transforming the company into an “Amazon of video games” to ensure he was engaged.
“We wanted to know why you would leave the safety and comfort of your current position, essentially kiss your family goodbye and get in there to build something from scratch,” said one of the sources familiar with the board’s thinking.
Cohen also acknowledged during the interview process that transformation would take time, the sources said.
Representatives of GameStop, Cohen and Furlong declined to comment.
“We have a lot of work ahead of us. You will not find us talking a big game, making a lot of high promises or telegraphing our strategy to the competition, that’s the philosophy we adopted at Chewy,” Cohen told GameStop shareholders. at the company’s annual meeting on Wednesday.
FINANCIAL FIRE POWER
It’s not clear how hands-off Cohen, 35, will be at GameStop when Furlong takes on his duties on June 21. Cohen has been obsessed with customer service and has personally called GameStop customers late at night to ask for feedback and has made a push to upgrade the company’s website and online ordering system, Reuters reported in March. Read more
GameStop said Wednesday it remained profitable, even trimming its operating loss in the first quarter to $ 40.8 million from $ 108 million a year ago.
Furlong will have plenty of financial firepower to deploy in its new mission. GameStop has already sold more than $ 550 million in stock since the Reddit rally began in January, some of which it paid for is debt and is launching a 700,000-square-foot warehousing facility in York, Pennsylvania. The company said Wednesday it would seek to sell up to 5 million more shares, currently worth $ 1.1 billion.
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