* Schulze failed to inform audit committee about Dunn
allegations-probe
* Tyabji to become chairman June 21
* Dunn gets $6.6 million severance pact
* Shares up 1.9 percent
By Brad Dorfman
May 14 (Reuters) – Best Buy Co Inc founder and
Chairman Richard Schulze is stepping down after he failed to
tell the board that former Chief Executive Officer Brian Dunn
had violated company policy by having “an extremely close
personal relationship” with a female employee, the electronics
retailer said on Monday.
Best Buy said an investigation by the board had found that
the relationship “negatively impacted the work environment,” but
involved no misuse of company resources.
Dunn, who left the company on April 10 during a probe of the
allegations, will receive a severance payment of $2.85 million,
the company said.
He will also get his previously earned bonus of $1.14
million for fiscal 2012 and previously awarded stock grants,
valued at $2.54 million at the close of business on Friday, as
part of a separation agreement reached following the
investigation.
Including unused vacation time, the value of the agreement
is about $6.6 million. Dunn agreed to not work for a competitor
for three years, up from the standard one year that is Best
Buy’s policy.
Schulze will be succeeded by Hatim Tyabji, chairman of
mobile network software company Bytemobile and chairman of Best
Buy’s audit committee. The change takes effect at the end of the
company’s annual meeting on June 21.
Dunn’s departure and ensuing revelations about the board
investigation come as the company struggles to fend off rivals
like Amazon.com Inc. Best Buy is still in the midst of
what it expects to be a six-nine month search to replace Dunn,
with board member G. Mike Mikan acting as interim CEO.
“It’s been clear that the company hasn’t taken an aggressive
enough measure to offset the competitive and structural
pressures they face,” Morningstar analyst R.J. Hottovy said.
“Taking a clean slate and beginning with not only a
new director, chairman but also with a new CEO is just what the
company needed.”
Schulze will become chairman emeritus, an honorary position,
and serve out his term as director through June 2013, the
company said.
“In December, when the conduct of our then-CEO was brought
to my attention, I confronted him with the allegations (which he
denied), told him his conduct was totally unacceptable and
contrary to Best Buy`s policies and everything I, and the
Company, stand for,” Schulze said in a statement released by the
company. “I understand and accept the findings of the Audit
Committee.”
Best Buy shares were up 1.9 percent at $19.67 in morning New
York Stock Exchange trading.
