Ex-Interim CEO Mikan Among Directors to Exit Best Buy
George “Mike” Mikan—who led Best Buy Company, Inc., as interim CEO through part of 2012—has left the Richfield-based company’s board, and the move could reportedly make it easier for founder Richard Schulze to take the company private.
Mikan, a former UnitedHealth Group executive, joined Best Buy’s board in 2008 and was named the company’s interim CEO in April following a scandal that involved former chief executive Brian Dunn and a female employee. Mikan was a contender for the permanent position as Best Buy conducted an executive search, but the company instead chose Hubert Joly, who took the reins in September. Following Joly’s appointment, remained a member of Best Buy’s board and became chairman of its audit committee.
Best Buy disclosed in a recent regulatory filing that Mikan resigned from its board on December 26; he has been named president of hedge fund firm ESL Investments, Inc., and “due to his new responsibilities and time requirements, he believed it was necessary to step down,” Best Buy said.
Mikan isn’t the only Best Buy director to announce departure plans: Matthew Paull plans to retire from the board on April 20, according to a filing with the U.S. Securities and Exchange Commission. Paull has been a member of Best Buy’s board since 2003 and served as its lead independent director since 2010.
Both Paull and Mikan were among the directors who pushed for Schulze to step down from Best Buy’s board of directors last spring, according to a report by the Star Tribune. Schulze stepped down from his role as Best Buy chairman in May after an independent investigation found that then-CEO Dunn violated company policy by engaging in a close personal relationship with a female employee—and that Schulze “acted inappropriately” when he failed to notify the company’s audit committee after learning about allegations of such a relationship.
Schulze then resigned from Best Buy’s board in June and said in August he was considering taking the company private. He struck a deal with the board that granted him access to the company’s non-public financial information in order to put together a formal buyout offer. The deal initially gave Schulze until mid-December to make a bid, but the deadline was then pushed back to February.
Analysts told the Star Tribune that, given Paull’s and Mikan’s contentious relationships with Schulze, their exits should lead to smoother negotiations as Schulze prepares a bid.
“I think the circumstances of who they are makes [their departure] less than coincidental,” David Strasser, a retail analyst with Janney Capital Management, told the Minneapolis newspaper. “There is a better chance of a deal.”
An unnamed source “close to Schulze,” meanwhile, told the Star Tribune that Schulze believes Paull and Mikan would likely have tried to block a takeover or at least made negotiations more difficult.
While Mikan left the board to focus on his new role at ESL Investments, Paull left due to a policy that requires directors to resign five years after “ceasing to pursue the primary career he or she was pursuing when appointed to the board,” Best Buy said. Paull is a former chief financial officer (CFO) at McDonald’s Corporation.
Neither Paull nor Mikan “stated or indicated that he was resigning due to any disagreements” with Best Buy, the company said in its regulatory filing.
Best Buy, which has cut jobs and closed big-box stores this year, saw a major exodus of leaders in 2012. The latest departure was digital executive Stephen Gillett, who left last month to join antivirus software firm Symantec.
Among the others who have left: Ryan Robinson, CFO for the company’s U.S. operations; Chief Technology Officer and Geek Squad founder Robert Stephens; Chief Marketing Officer Barry Judge; and Dave Deno, CFO of Best Buy’s international division and president of its Asia region.
The struggling company reported a net loss of $13 million, or 4 cents per share, from continuing operations for the quarter that ended November 3. That’s compared to net earnings of $173 million, or 47 cents per share, for the same period a year ago. Excluding restructuring charges, the company’s net loss totaled $10 million, or 3 cents per share—falling significantly short of the 12 cents that analysts polled by Thomson Reuters were expecting.