GameStop Corp (GME.N) chairman Ryan Cohen insisted on eliminating corporate excesses such as a corporate jet and used the lure of the video game retailer’s rebuild to recruit the chief Australian Amazon.com Incs (AMZN.O) Matt Furlong as Chief. executive, according to people familiar with the process.
Cohen wanted the message to be harsh, the sources familiar with the discussions said. Transforming the struggling physical retailer into an ecommerce powerhouse would require laser-like focus and determination, Cohen told Furlong.
The role would come with no frills, but it would pay off GameStop shares largely if the turnaround was successful. The majority of Furlong’s performance-based compensation will be linked to stock awards.
The move represents Cohen’s boldest bet in his drive to attract Amazon talent. GameStop’s market value soared to $ 16 billion from $ 250 million a year ago, as hobby traders challenged hedge funds betting against the company and turned it into a popular “meme” action on Reddit and other social media.
Most analysts say the company’s valuation is out of step with the fundamentals of its business, which is a bold gamble for any GameStop recruit who accepts volatile action as part of their compensation.
GameStop on Wednesday announced the hiring of Furlong alongside that of North American CFO of Amazon consumer companies, Mike Recupero, as CFO. They were the last Amazon veterans poached by Cohen, the billionaire co-founder of online pet supplies retailer Chewy Inc (CHWY.N), who joined GameStops’ board in January.
In March, Cohen appointed Amazon COO Jenna Owens as COO, a month after appointing Amazon Web Services senior engineer Matt Francis as CTO. . Another Amazon executive in e-commerce giant’s grocery store, Elliott Wilke, was hired in April as director of growth.
Amazon did not respond to a request for comment.
Cohen spent two months speaking to more than 50 potential CEO candidates from various industries, including games 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 from Cohen’s network referred him to Furlong as a strong candidate for GameStop CEO, he added. one of the sources.
Based in Miami, Cohen called Furlong in Australia and hosted a series of virtual meetings that then included GameStop board members. The job description called for fixing the company’s distribution network, deconstructing its website and realizing Cohen’s vision of high-quality customer service, the sources said.
Furlong would have to spend long hours at work without the perks that exiting GameStop CEO George Sherman enjoys, such as a company plane and executive assistants, Cohen told him. While Sherman will remain on GameStop’s board, he is stepping down as CEO because the board decided he doesn’t have the necessary e-commerce expertise, the sources say.
A representative for Sherman declined to comment.
In discussions with Furlong, Cohen said former GameStop executives were letting order fulfillment operations and customer service languish, the sources said. If Furlong solved these issues, he would be handsomely rewarded with GameStock actions.
Details of Furlong’s compensation have yet to be disclosed by GameStop.
Furlong, 42, was eager for the challenge and happy to move to GameStop’s headquarters in Grapevine, Texas, the sources said.
Some GameStop board members even played out the challenges Furlong would face in turning the company into a “Video Game Amazon” to make sure he was engaged.
“We wanted to know why you would leave the safety and comfort of your current location, basically kiss your family goodbye, and go there to build something from scratch,” said one of the sources familiar with the thought. from the administration board.
Cohen also acknowledged during the interview process that the transformation would take time, the sources said.
Representatives for GameStop, Cohen and Furlong declined to comment.
“We have a lot of work ahead of us. You won’t find us talking about a great game, making a bunch of high promises or telegraphing our strategy to the competition, that’s the philosophy we have adopted at Chewy, ”Cohen told GameStop shareholders. at the company’s annual meeting on Wednesday.
FINANCIAL POWER OF FIRE
It’s unclear how close to GameStop Cohen, 35, will be once Furlong takes office on June 21. Cohen is obsessed with customer service, personally calling GameStop customers late at night to solicit feedback, and made an effort to upgrade the company’s website and online ordering system, Reuters reported. in March.
GameStop said on Wednesday it remained in deficit, although it reduced its first quarter operating loss to $ 40.8 million from $ 108 million a year ago.
Furlong will have a lot of financial firepower to deploy in his new mission. GameStop has already sold more than $ 550 million in stock since the Reddit rally began in January, some of which was used to pay off debt and launch a 700,000 square foot warehouse in York, Pennsylvania. The company said on Wednesday it would look to sell up to 5 million additional shares, currently worth $ 1.1 billion.
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