Make no mistake about it. Best Buy Co. Inc. (NYSE: BBY) founder and former chairman Richard Schulze played a major role in the ruin of the retail chain, which took about two years, before he made a $9 billion offer to buy the company. Schulze’s offer of about $25 a share is no better than the level at which the stock traded last March before its recent decline, and it is well below Best Buy’s 52-week high of $28.53.
Schulze essentially controls Best Buy even though he has not held the CEO title since 2003. But he founded the company in 1966 and was chief executive for more than 30 years. He owns 20.24% of Best Buy’s shares. As for roles he played at Best Buy before he left the board earlier this year, the firm’s proxy says:
The Chairman of the Board provides guidance to the CEO, and sets the agenda for and presides over meetings of the full Board. He also focuses on Board oversight responsibilities, strategic planning and mentoring Company officers.
Schulze was more powerful than most public company chairmen.
Schulze should get a great deal of the praise for the extraordinary run of success Best Buy had from 2003 until 2010. Revenue went from $20.9 billion to $49.7 billion. Net income rose from $622 million to $2.2 billion. But since 2010, Best Buy’s results have collapsed. What Best Buy did over nearly a decade was nearly undone in just over two years. For the reasons he gets credit, Schulze also gets the blame. The guidance he gave the CEO and his strategic planning activity helped trigger the rapid decline of one of America’s great retailers.
Schulze holds a position that exists at very few public companies. Somewhat like Mark Zuckerberg at Facebook Inc. (NASDAQ: FB) or the Sulzberger family at the New York Times Co. (NYSE: NYT), he has an outsized influence over the policies of the corporation — even if his shareholdings are less than 50% of the total.
Now Schulze has made an offer for the company at a relatively low price, based on levels recently past — a company that began to falter on what was clearly his watch.
Douglas A. McIntyre