SecProbe.io

CORRESP
1
filename1.htm

corresp

VIA EDGAR AND OVERNIGHT MAIL

Division of Corporation Finance

U.S. Securities and Exchange Commission

Mail Stop 3561

100 F Street, N.E.

Washington, D.C. 20549-3561

August 19, 2011

    Attention:

    Ms. Mara L. Ransom, Esq.

    Re:

    GameStop Corp. (the “Company”, “GameStop”, “we” or “our”)

    Form 10-K for the Fiscal Year Ended January 29, 2011

    Filed March 30, 2011

    Definitive Proxy Statement on Schedule 14A

    Filed May 16, 2011

    File No. 001-32637

Dear Ms. Ransom:

          We are writing in response to the comments of the Staff of the Division of Corporation Finance
(the “Staff”) of the Securities and Exchange Commission (the “Commission”) that were contained in
your letter dated August 1, 2011. For your convenience, we have repeated and numbered each
paragraph to correspond to the numbered comment set forth in the Staff’s comment letter.

Form 10-K for Fiscal Year Ended January 29, 2011

Risks Related to Our Indebtedness, page 21

Despite current anticipated indebtedness..., page 22

    1.

    Please revise to quantify the amount of additional indebtedness that you may incur
pursuant to the exceptions and qualifications contained in the indenture governing the
senior notes and your senior credit facility.

    Company Response:

    In future filings, we will revise this disclosure to include additional language similar to
the following:

    “Absent consent from our lenders, the Company may not incur more than $750 million
of additional unsecured indebtedness to be limited to $250 million in

1

    general unsecured obligations and $500 million in unsecured obligations to finance
acquisitions valued at $500 million or more.”

Item 2. Properties, page 23

    2.

    Please file the lease governing your distribution facility in Louisville, Kentucky or
explain to us why you do not believe such lease is material. See Item 601(b)(10)(ii)(D) of
Regulation S-K.

    Company Response:

    We believe that the lease for our distribution facility in Louisville, Kentucky is
immaterial both in “amount” and “significance” as defined in Item 601(b)(10)(ii)(D) of
Regulation S-K. The annual rent expense is less than one tenth of one percent of fiscal 2010
total “selling, general and administrative expenses” reflected in our consolidated statement
of operations included in our Form 10-K filed March 30, 2011. In addition, there are no
rights or obligations related to this lease agreement that are material or unique to our
business from a qualitative perspective and we believe that adequate replacement space would
be available on broadly similar commercial terms if this lease agreement was terminated or
expired. In the event that the lease was terminated or expired, we believe that the
distribution operations that take place at this property could be relocated with minimal
disruption to our business by either absorbing these operations into our distribution
facility in Grapevine, Texas or replacing the facility with another readily available
facility in the existing general geographic area.

Definitive Proxy Statement on Schedule 14A

Election of Directors — Proposal 1, page 2

Information Concerning the Directors and Nominees, page 2

    3.

    Please revise to disclose on an individual basis each director’s and each nominee’s
specific experience, qualifications, attributes or skills that led to your conclusion that
such person should serve as your director. For further guidance, please consider Question
116.05 in our Regulation S-K Compliance and Disclosure Interpretations.

    Company Response:

    The Company’s current disclosure of the experience, qualifications, attributes or skills
related to qualification as a director is detailed on page 3 under “Information Concerning
the Directors and Nominees.” In future filings, in the biographies of the directors, we will
discuss each director’s specific experience, qualifications, attributes or skills that led
to the conclusion that the person should serve as director for the Company on an individual
basis. The additional disclosure will be similar to the following example for one of our
current directors:

2

    “Mrs. Shern’s qualifications to serve on the Board include her experience in a
senior position at a global professional services firm related to the retail
industry, her financial experience, including as a director on other audit
committees, and her senior leadership experience, all of which enable her to provide
key insights to the Company related to governance, compliance, financial matters and
retail operations.”

Compensation Discussion and Analysis, page 12

Key Elements of Compensation, page 16

Base Salaries, page 16

    4.

    In addition to providing the disclosure in this subsection with respect to your fiscal
2011 base salaries, please also provide such disclosure with respect to your fiscal 2010
base salaries. We note that you have provided some disclosure with respect to your fiscal
2010 base salaries in your definitive proxy statement filed on May 18, 2010. However, such
disclosure does not include all aspects of your fiscal 2010 base salaries, including the
increases paid to Messrs. Raines, Bartel and Lloyd in connection with their promotions. See
Item 402(b)(2)(ix) of Regulation S-K

    Company Response:

    Part 1

    With respect to disclosure of our fiscal 2010 base salaries, in future filings, we will
include a discussion of base salaries for our named executive officers for both the current
fiscal year and prior fiscal year. The additional disclosure will be similar to our
discussion of base salaries included in the “Compensation Discussion and Analysis — Key
Elements of Compensation” section on page 13 of our Definitive Proxy Statement on Schedule
14A filed May 18, 2010.

    Part 2

    With respect to disclosure of the increases to the 2010 base salaries of Messrs. Raines,
Bartel and Lloyd in connection with their promotions, in future filings, we will include a
discussion similar to the following:

    “The Compensation Committee met on May 26, 2010 to establish the base salaries
associated with the promotions of Mr. Raines from Chief Operating Officer to Chief
Executive Officer, Mr. Bartel from Executive Vice President of Merchandising and
Marketing to President and Mr. Lloyd from Interim Chief Financial Officer and Chief
Accounting Officer to Executive Vice President and Chief Financial Officer. In
setting the base salaries of these named executive officers for the remainder of
fiscal 2010, the Compensation Committee considered their compensation history, their
compensation level relative to all

3

    other Company executives, the increased responsibilities associated with their
promotions, the base salaries of the predecessor named executive officers in the
same or similar positions and information received from Towers-Perrin following its
review of the Company’s executive compensation program in fiscal 2008. Effective
June 2, 2010, in connection with their promotions, Mr. Raines’ base salary was
increased from $950,000 to $1,000,000; Mr. Bartel’s base salary was increased from
$610,000 to $750,000; and Mr. Lloyd’s base salary was increased from $390,000 to
$500,000.”

Long-term Incentive Awards, page 19

    5.

    Please discuss how each of the factors referenced in the third and fifth paragraphs on
page 19 contributed to your decision to grant the amounts of restricted stock and cash
bonuses that are disclosed on page 20 and in the Summary Compensation Table. For example,
please discuss the specific metrics you used to evaluate your financial performance over
the preceding year and the specific performance, responsibilities and contributions of each
of your named executive officers. See Item 402(b)(1)(v), (b)(2)(v) and (b)(2)(vii) of
Regulation S-K.

    Company Response:

    In future filings, we will include additional disclosure on the factors that contributed to
our decision to grant amounts of restricted stock and cash bonuses similar to the following:

    “In determining the amounts of restricted stock and cash bonuses to grant to named
executive officers for fiscal 2011, the Compensation Committee considered the
Company’s overall performance and each named executive officer’s individual
contributions to the Company’s overall performance. The Company performance that
received the most significant consideration included the following:

    Implementation of Strategic Initiatives

    •

    Launched PowerUp Rewards, a new loyalty program throughout the U.S. and
enrolled over six million members;

    •

    Developed the technology to sell digitally distributed add-on content
from both Sony and Microsoft and launched the sale of add-on downloadable
content in all U.S. stores; and

    •

    Completed the acquisition of Kongregate, Inc., an online gaming site
with over 30,000 free-to-play games and over 13 million unique visitors per
month.

4

    Financial Performance

    •

    Increased revenues by 4.4%;

    •

    Increased operating earnings by 4.0%, which was 97% of the targeted
operating earnings for fiscal 2010;

    •

    Grew net income by 8.1% and earnings per share by 17.8%;

    •

    The Company’s share price increased from $19.77 at the close of the last
trading day of fiscal 2009 to $20.98 at the close of the last trading day
of fiscal 2010; and

    •

    During fiscal 2010, the Company repurchased $381 million in shares of
its common stock and retired $200 million of debt.”

    Factors considered in determining the amounts for each named executive officer included
individual performance, individual contributions toward achievement of strategic objectives
and comparisons of long-term incentives and overall compensation of similar positions within
the Company’s peer group.

Executive Compensation, page 25

    6.

    We note the disclosure in footnote (5) to the Summary Compensation Table and footnote
(3) to the Director Compensation Table that the amounts reported represent the amount
charged to expense in the applicable fiscal year. Please explain to us what you mean by
“the amount...charged to expense in the applicable fiscal year” and why you based
disclosure on this measure instead of disclosing the full, pre-tax amount of the award.
Please also provide an analysis of why you disclosed the amounts of such awards in the
“Bonus” column of the Summary Compensation Table and in the “All Other Compensation” column
of the Director Compensation Table. We note that you have disclosed that “[t]he purpose of
the matching cash bonus was to preserve the pool of shares available for grant under the
2001 Incentive Plan and to use the cash bonus to satisfy any applicable withholding taxes
due to the Company from the recipient with respect to the related restricted share vesting
and eliminate the need for recipients to sell shares upon vest to cover withholding taxes.”
In light of this purpose, please analyze whether the cash bonus may properly be
characterized as a tax gross-up.

    Company Response:

    Part 1

    The “amount...charged to expense in the applicable fiscal year” refers to the amount of
expense recognized in selling, general and administrative expenses in the Company’s
consolidated statements of operations in accordance with accounting principles generally
accepted in the United States of America related to the cash value of the cash bonuses that
are awarded simultaneously with the grants of restricted stock awards. Each recipient of a
cash bonus award receives the right to an amount of cash consideration that is fixed on the
award date and vests ratably over a three-year service

5

    period. We recognize the associated expense on a straight-line basis over the three-year
period in which the services are performed. The amount reflected includes the expense
related to the cash bonus earned for both the 2010 and 2009 cash bonus awards based on
continued service provided by the named executive officer during the current fiscal year.
For example, the fiscal 2010 amount of $1,354,000 presented in the “Bonus” column for Mr.
DeMatteo is comprised of $600,000 (or one-third of the $1,800,000 total cash bonus award
listed on page 20) related to his 2010 grant and $754,000 (or one-third of the $2,262,000
total cash bonus award) related to his 2009 grant.

    Part 2

    We based our disclosure on this measure instead of disclosing the full, pre-tax amount of
the award, because the expense recognized reflects the amount that is earned by the
recipient during the fiscal year. The cash bonus award is granted based on performance in
the prior fiscal year, but also provides retention value to the Company. The award is earned
and paid over a three-year vesting period to incentivize the named executive officer to stay
during the vesting period. The named executive officer must stay through the award vesting
dates to earn the bonus. The full, pretax amount of the 2010 grant of cash awards are
disclosed under the discussion of “2010 Grants” on page 20.

    Part 3

    We disclose this amount in the “Bonus” column of the Summary Compensation Table and in the
“All Other Compensation” column of the Director Compensation Table because it is a
discretionary cash award that is not based on performance, is not awarded either under an
equity incentive plan or a non-equity incentive plan (both as defined in Item 402(a)(6) of
Regulation S-K) and is not a tax gross-up.

    Part 4

    As discussed on page 21 under “2011 Grants,” “in order to grant each recipient a long-term
award with an overall value similar to the grant in February 2010, the Board approved cash
bonuses...to offset the decline in value of the restricted share grant.” The cash bonus
award was necessary in order “to preserve the pool of shares available for grant under the
2001 Incentive Plan.” The primary purpose of these cash awards is to supplement the awards
of restricted shares to bring the overall value of long-term incentive compensation and
total compensation in line with our peer group and with past grants discussed on page 15.
Although the cash bonus does provide cash consideration that can be used “to satisfy any
applicable withholding taxes due to the Company from the recipient with respect to the
related restricted share vesting and eliminate the need for recipients to sell shares upon
vest to cover withholding taxes,” the value of each cash grant was not determined in
consideration of the recipient’s cash needs to pay withholding taxes upon vest. The Company
does not view the cash bonus as a tax gross-up because the total value of the long-term
award remained the same when the Company began granting cash bonuses. There is no additional
cost to the Company and no additional taxable income to the employee, whereas additional
cost and additional income would be incurred if the cash bonus was a tax gross-up.

6

    7.

    Please explain to us the accounting model you applied with respect to the Cash Bonus
Awards and your rationale for using that model. Please include in your response your
consideration as to the applicability of ASC 718.

    Company Response:

    Please see our response to comment number 6 regarding the accounting model we applied to the
cash bonus awards.

    We do not believe that the cash bonus awards meet either of the criteria in Financial
Accounting Standards Board’s Accounting Standards Codification Topic 718 (subtopic 10-15-3)
because the awards (a) are not “based, at least in part, on the price of the entity’s shares
or other equity instruments” and (b) do not “require or may require settlement by issuing
the entity’s equity shares or other equity instruments.” Although we do state the value of
the cash bonus awards in terms of the equivalent value of our common shares, the amount of
the cash bonus award is fixed and determinable on the date of the award, is independent of
any fluctuations in our share price subseque