Joly Gets $20M Signing Bonus, $1.18M Base Salary from Best Buy
Former Carlson CEO Hubert Joly—who will take the reins at Best Buy Company, Inc., early next month—will receive a signing bonus valued at $20 million. His annual base salary, meanwhile, is in line with that of his predecessors.
Best Buy said Monday that Joly has been selected as its next president and CEO—an announcement that came a day after global hospitality company Carlson said that Joly resigned “to pursue other career opportunities” and named its new CEO.
Then on Tuesday, Best Buy disclosed compensation arrangements for Joly. According to a U.S. Securities and Exchange Commission (SEC) filing, his initial base salary will total $1.175 million. That’s comparable to the $1.1 million base salary rate for Joly’s two most recent predecessors—interim CEO G. “Mike” Mikan, who Joly will succeed next month, and former CEO Brian Dunn, who left in April amid allegations that he had an inappropriate relationship with a female subordinate.
Meanwhile, the incoming chief executive will receive a $20 million signing bonus to compensate for what he may have forfeited by leaving Carlson. The signing bonus consists of:
• A $3.5 million cash award
• A $3 million stock grant
• A $6 million restricted stock award that will vest in 36 equal monthly installments; the vested portion will become payable six months after Joly leaves Best Buy
• A $3.75 million stock options award, a quarter of which will vest right away and 75 percent of which will vest in equal installments on the first three anniversaries of Joly’s start date
• $3.75 million in “performance share units”
Starting in fiscal 2014—which will begin February 1, 2013—Joly will also be eligible for an annual bonus amounting to between 200 percent and 400 percent of his base salary at that time, according to the SEC filing. The percentage he is awarded will be tied to company performance.
Also starting in fiscal 2014, Joly will be eligible for “long-term incentive compensation awards,” the filing said. Such awards will be determined by Best Buy’s compensation committee, but Joly’s initial award will have a “target value” of at least $8.75 million.
“Over the past 15 years, Mr. Joly has held senior executive positions and led turnarounds and growth strategies in the technology, media, and services sectors and demonstrated skills and qualifications that the board deemed necessary to the CEO role,” Best Buy said in the filing that outlined the compensation arrangements.
The filing also revealed that Joly, a French citizen, is entitled to a $6.25 million payment from Best Buy if, by September 30, he hasn’t gained the necessary authorization to work in the United States and thus commence employment with Best Buy.
And if Joly is terminated in a change of control, he would receive cash severance that’s equal to two times his annual salary, a target bonus, and a pro-rated annual bonus based on company performance—and his performance share units would be paid out.
Joly joins Best Buy as the struggling retailer attempts to turn itself around—and at a time when founder and former chairman Richard Schulze is attempting to take the company private.
Best Buy’s stock has slid this week on news related to the imminent leadership transition. Shares were trading down 7.5 percent at $18.74 early Monday afternoon—and Best Buy’s stock closed at $17.72 Wednesday, down about 1 percent.