Best Buy Company, Inc., which has seen the departure of several key executives this year, has awarded its leaders financial incentives to remain with the company in its time of turmoil—but one longtime consultant has quit on the heels of Best Buy’s retention efforts.
Don Delves, who worked with the compensation committee of Best Buy’s board for seven years as an independent consultant, exited the role after the Richfield-based electronics retailer awarded retention bonuses not tied to performance to more than 100 managers, according to a report by Bloomberg News.
Citing “three people with knowledge of the matter,” Bloomberg reported that Delves—president of Chicago-based executive pay advisory firm Delves Group—opposed the payments. Delves confirmed with Bloomberg that he resigned this month.
Best Buy had previously disclosed plans to award retention bonuses to a few key leaders, but Bloomberg reported that the awards extended much further.
Best Buy said in a June regulatory filing that it would pay a total of $2 million in cash, as well as stock awards valued at roughly $8 million, to four executives: James Muehlbauer, chief financial officer; Shari Ballard, president of the company’s international operations; Carol Surface, chief human resources officer; and Michael Vitelli, president of Best Buy’s U.S. operations.
Again citing three unnamed sources, Bloomberg reported that Best Buy awarded bonus packages to more than 100 other Best Buy managers, although the news outlet didn’t report how much those additional awards are worth.
Best Buy wrote in its June filing that the bonuses are “necessary to enable a stable CEO transition and appropriate continuity of leadership,” and it echoed that reasoning in a Monday statement provided to Bloomberg.
“We’re confident that the compensation paid by Best Buy is fair, reflects market realities, and is based on responsible practices that reflect the transformation of the organization,” the company told Bloomberg. “As part of our long-term plan, and to ensure a strong and stable future for the company, Best Buy’s board of directors has taken action to retain key senior leaders during the current period of transition.”
Meanwhile, James Reda, managing director of New York-based executive compensation consultancy James F. Reda & Associates, told Bloomberg that millions of dollars paid to top executives is “a lot just for sticking around,” and given that “the retail space is shrinking,” the odds are “not great” that the four executives receiving major incentives would leave the company.
Read the full Bloomberg report here.
Best Buy’s efforts to retain its leadership come at a time of uncertainty for the company. Chief Technology Officer Robert Stephens, Chief Marketing Officer Barry Judge, and International Chief Financial Officer Dave Deno were among those who left the company this year.
Additionally, former chief executive Brian Dunn resigned in April amid an investigation that found that he violated company policy by engaging in “an extremely close personal relationship with a female employee that negatively impacted the work environment.”
The investigation also found that Richard Schulze, the company’s founder and former chairman, “acted inappropriately” when he failed to notify Best Buy’s audit committee after learning in December about allegations of such a relationship. Schulze abruptly resigned as chairman and from his director post last month and announced plans to explore options for his 20.1 percent ownership stake, prompting speculation that he might attempt to take the company private. Schulze has since reportedly hired a New York attorney and investment bank Credit Suisse, which specializes in leveraged buyouts, to advise him.
Best Buy is Minnesota’s third-largest public company based on revenue, which totaled $50.7 billion for the fiscal year that ended on March 3.