Former CEO of Best Buy (NYSE: BBY) Brian Dunn has an inappropriate relationship with a female employee and lost his job. The market expected that. The bomb shell about the incident surrounding Dunn was that Chairman and founder Richard Schulze knew about the relationship and did not tell the board audit committee. That has caused him to lose his job–one which he has had since 1966. Schulze is as close as Best Buy has to a control shareholder, and owns 20.24 % of the company’s stock, which makes his removal all the more extraordinary.
The board of Best Buy announced that
Mr. Dunn violated the registrant’s policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment, but Mr. Dunn’s relationship with the female employee demonstrated extremely poor judgment and a lack of professionalism, but the inquiry revealed no misuse of the registrant’s resources or aircraft.
Dunn, who should probably have bee fired for cause because he likely violated Best Buy’s ethics guidelines nonetheless will leave the company a rich man
Best Buy disclosed he gets as severance
• the previously earned fiscal year 2012 bonus of $1,140,000;
• the continued vesting of the previously awarded and reported restricted stock grants of 131,876 shares on their original terms over the next three years, at which point any unvested shares of restricted stock will vest (such restricted stock was valued at the close of business on May 11, 2012, at $19.28 per share (totaling $2,542,569));
• a severance payment of $2,850,000, payable in installments over 36 months, subject to Mr. Dunn’s compliance with the non-competition provisions; and
• compensation for unused vacation of $106,742 (in accordance with Best Buy policy).
As for Richard Schulze, who really should have been forced to resign immediately:
When Mr. Schulze steps down as Chairman (on June 21), he will become Founder and Chairman Emeritus, an honorary position. As Founder and Chairman Emeritus, Mr. Schulze will continue to maintain an office at the Company’s headquarters for his personal use, and he and his wife will continue to receive medical insurance benefits. Mr. Schulze will serve out the remainder of his term as director through June 2013
Given the magnitude of their misdeeds, neither man deserves what he got.
the Board elected director Hatim Tyabji to succeed Richard Schulze as Chairman of the Board, effective at the conclusion of the annual stockholders’ meeting
Douglas A. McIntyre