Best Buy CEO probe: No misuse of resources, chairman steps down
After investigating former Chief Executive Brian Dunn’s relationship with a female employee, an internalBest Buy Co.probe found “extremely poor judgment and a lack of professionalism” but no misuse of the electronics retailer’s resources.
Dunn will walk away from Best Buy with a severance package worth an estimated $6.6 million and a non-compete period that was raised to three years from one year, the company said Monday. Best Buy’s board also said it elected a new chairman.
The company had been looking into allegations about Dunn’s personal conduct since before he resigned in April. The inquiry, which was launched by the retailer’s audit committee and completed by an outside law firm, found that Dunn “violated company policy” and “negatively impacted the work environment” by carrying on with the employee.
Investigators combed through “voluminous interviews, documents and other data,” including searches through Dunn’s and the employee’s computers, company phone records and more.
According to the report, Dunn and the employee characterized the relationship as a close friendship that wasn’t romantic. But investigators found that the two often conducted private visits in Dunn’s office and in conference rooms, as well as in frequent meetings outside the company.
Investigators found that Dunn often provided favors to the woman, including tickets to at least seven concerts and sporting events, including one Las Vegas event where he solicited a free ticket for the employee.
The pair were also often in contact for non-business reasons. During two trips abroad last year, Dunn reached out to the woman by cellphone at least 224 times, the probe found.
But investigators concluded that Dunn hadn’t misused corporate resources, including aircraft. They did, however, find fault with Chairman of the Board Richard Schulze, who they said was first told of Dunn’s alleged transgressions in December.
Schulze “acted inappropriately” by failing to raise the issue with Best Buy’s audit committee, which wasn’t informed until mid-March, according to the report.
Schulze, who said in a statement that he understands and accepts the findings, added that he confronted Dunn with the allegations in December only to have them denied.
“I … told him his conduct was totally unacceptable and contrary to Best Buy’s policies and everything I, and the Company, stand for,” Schulze said.
After a Saturday vote, the board said it will replace Schulze with audit committee chairman Hatim Tyabji following Best Buy’s annual meeting on June 21. Tyabji has been a director since 1998.
Schulze will become chairman emeritus – an honorary position – and will serve out the rest of his director term through June 2013. Best Buy’s board also said that it now recommends that shareholders approve a proposal that will require each director to be re-elected annually.
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