Best Buy (NYSE: BBY) just issued another piece of nasty news. It will close its nine branded stores in China. It is another in a series of signs that the electronics retailer is in a steep decline.
The most powerful Best Buy director is Matthew H Paull. He made $198,075 in 2010, serving as the corporation’s Lead Independent Director. He has been on the board since September 2003, which has been long enough to witness Best Buy’s problems and the lack of results during the tenure of CEO Brian J. Dunn
Dunn has been a director and CEO since June 2009. By most measurements, both financial and stock market, Dunn has been a remarkably poor CEO. That has not stopped Paull and other directors from making Dunn richer each year. He made total compensation of $10,232,000 in 2010, $2,379,000 in 2009, and $3,964,000 in 2008. His base salary rose each of those years.
Best Buy revenue was up from 2005 to 2010 by 81% to $49.7 billion, but net income only rose 34% to $1.3 billion. Best Buy has not been able to keep up with the initiatives of Wal-Mart (NYSE: WMT), Costco (NYSE: COST), and other big box retailers who have aggressively entered the consumer electronics business. Best Buy has made no substantial effort to use its store base to diversify into other categories even though the company admits it is losing market share in its core business.
Best Buy’s online programs are also flawed. Colin A. McGranahan, a senior analyst at Sanford C. Bernstein & Company, said people shop at Best Buy stores and then buy the products they see online. Bestbuy.com has not done anything obvious to combat this.
Best Buy’s CEO and its chairman are obviously not doing a good job. It falls to Matthew H Paull to correct that. And, he has not done a thing that the public and shareholders can see.
Paull, by the way, owned only 10,169 shares as of the filing of Best Buy’s last proxy. That does not leave him with much financial risk.
Douglas A. McIntyre