Best Buy Chairman Out; Board Investigation Details Emerge2:50 PM EST Mon. May. 14, 2012
A month after its CEO resigned, Best Buy's chairman resigned as well in the wake of an internal inquiry into improprieties concerning former CEO Brian Dunn.
Dunn resigned last month, the result of a "mutual agreement" between himself and the big box retailer's board of directors.
Best Buy's board Monday released the results of an independent investigation into Dunn's personal conduct. The investigation found, according to Best Buy, that Dunn had violated company policy by engaging in a relationship with a female employee that "negatively impacted the work environment."
The investigation also found that former chairman Richard Schulze failed to act appropriately when he first heard of Dunn's relationship with the female employee in December 2011 -- namely, Schulze did not bring the matter to the attention of the board's Audit Committee, according to Best Buy.
Schulze resigned as chairman on Saturday and said in a statement issued from Best Buy, "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. I understand and accept the findings of the Audit Committee."
Best Buy's board elected director Hatim Tyabji to succeed Schulze as chairman, effective at the conclusion of the company's annual meeting on June 21. Tyabji is currently chairman of Best Buy's Audit Committee and has served as a director since 1998.
Best Buy's Audit Committee was first informed of the allegations in March 2012, according to the company, and it hired law firm WilmerHale to conduct an independent investigation.
The investigation of Dunn found that his actions were unrelated to company operations and financial controls and it found no misuse of company resources or misuse of aircraft by Dunn, according to Best Buy.
The independent investigation included 45 interviews of 34 current or former Best Buy employees; searches of e-mails and other documents from Dunn and the female employee, who was not named; and a review of their purchase records, phone records and more over a three-year period, according to Best Buy.
Dunn will receive a separation agreement worth approximately $6.6 million that includes a three-year noncompete clause, according to Best Buy. He receives a $1.14 million bonus for fiscal 2012 that was previously earned, previously awarded stock grants totaling $2.5 million based on May 11 closing price, a severance payment of $2.85 million and $106,742 for unused vacation compensation, according to Best Buy.
The payments come as Best Buy is struggling financially. In March, the company said it planned to close 50 stores in the U.S. and lay off 400 employees.
Tyabji has been chairman and CEO of Bytemobile since 2001. He is also chairman of Jasper Wireless and serves on the boards of Merchant e-Solutions, Touch Networks (Australia) and the Missile Defense Advocacy Alliance. Previously, he was chairman and CEO of Saraïde, a provider of wireless Internet and data services, and was an early board member at Ariba, according to Best Buy. He also was chairman, president and CEO of VeriFone from 1986 to 1998.