Best Buy Chairman Steps Down After CEO 'Relationship' Probe

Richard SchulzeNEW YORK -- Best Buy said Monday its founder Richard Schulze is stepping down as chairman after an investigation found that he knew that the CEO was having a relationship with a female employee and failed to alert the audit committee.

The company also said that despite the fact that its audit committee found that then-CEO Brian Dunn violated company policy by having a 'close personal relationship' with a female employee, he gets a severance package worth about $6.6 million.

Best Buy hired an outside law firm in March to investigate Dunn, who resigned in April. The committee found that Dunn's relationship with a female employee that showed poor judgment. But they found he did not misuse company resources or company aircraft related to the relationship.

Still, the inquiry showed that Schulze, who has been with the company since its inception in 1966, acted inappropriately when he found out about the relationship. He is resigning and will be replaced by Hatim Tyabji, chairman of its audit committee.

Schulze will receive the title chairman emeritus, an honorary position, and serve out his term as director through June 13.

"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," Schulze said in a statement.

Best Buy said in light of the findings it will review corporate policies and procedures. It will also recommend that shareholders approve a proposal requiring every director to stand for reelection on an annual basis.

Dunn was a 28-year company veteran who had been head of Best Buy since 2009 until he resigned in April after the board launched the investigation into his personal conduct. His severance package includes a 2012 bonus of $1.1 million, stock grants of $2.5 million, a severance payment of $2.9 billion and more than $100,000 for unused vacation.

Best Buy shares fell 27 cents, or 1.4%, to $19.55 in morning trading after falling to $19.02 per share earlier in the session, its lowest level in more than three years.

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Everything in their stores are overpriced and the customer service has to be the worse there is. To say the staff is snotty and condescending is being polite, especially if you're over the age of 30. I have a Best Buy account but haven't been in any of the stores for three years. The only staff that pays any attention to customers are the security people, otherwise you're ignored from the moment you walk in until you depart. They can close the doors like circuit city did and they won't be missed.

May 15 2012 at 6:01 PM Report abuse rate up rate down Reply

hekaplan76 again with the emotional or humane position regarding a business transaction. Is it the stores fault you didn't open the product immediately or within it's return policy window. The store doesn't live with the customer thereby providing or possibly exposing the store to the customer's business. Basically, the store reacted based on how they address all customer issues strictly using the facts. I do understand that things happen which effect or change the buyer or purchaser's dynamic, but the store is a business and in know way went out of it's business model to intentionally harm the customer. As previously stated in other comments the store offer a credit for another TV that is fair. In addition, I have experienced my own issues with Best Buy, which for the most part where mutually satisfied. Which I interpret allows me to make an observation. With regards to the CEO and Chairman since the Chairman was and is the FOUNDER AND CREATOR OF BEST BUY he I believe is entitled to certain above normal compensation. The CEO is another story he is an employee period, paid to do a job period not enrich himself, at the shareholder, stakeholders, customer's expense. There are thousands of business schools out there producing extremely talented individuals that would gladly except for less than what was being miss paid to this CEO. I bet and would have done as good a job if not better, but shareholders must believe that if you throw lot's of money at certain or all high level positions it's a guarantee that the stock will improve which means the investor's make a profit. As quoted their was a lot of POOR JUDGEMENT used.

May 15 2012 at 1:37 PM Report abuse -1 rate up rate down Reply

I won't step foot into another Best Buy. They are way overpriced and their customer service terrible.

May 15 2012 at 1:23 PM Report abuse +1 rate up rate down Reply

Best Buy should review all its customer service policies. A new flat-screen TV that was purchased for one of my daughters by my other daughter and me was not opened until the past week. She was too busy with her job since the Christmas holidays to set up this new Samsung product. Unfortunately, the item was inoperable when she attempted to connect it to her cable system. Best Buy said there was only a 30 day warranty on this item, and she could either have them send it out for repair or they'd give her a credit on another TV. I find a 30 day window is ridiculous on a new sealed-in-the-carton product. She is incredulous as is my family. That's $300 down the drain, as far as I'm concerned.

May 15 2012 at 12:18 PM Report abuse +1 rate up rate down Reply
1 reply to hekaplan76's comment
Rothwell Gibson Wade

or they'd give her a credit on another TV

What more could you want? Credit towards another tv is the exact same thing as exchanging!!

May 15 2012 at 12:48 PM Report abuse -1 rate up rate down Reply

It is plain to see the Dunn did do her.

May 15 2012 at 11:58 AM Report abuse rate up rate down Reply

lol only in america do certain people get fired with millions put in their pockets

May 15 2012 at 8:22 AM Report abuse +1 rate up rate down Reply

Worst buy 'nuff said

May 15 2012 at 6:26 AM Report abuse +1 rate up rate down Reply

If the man did nothing to harm Best Buy and did his job... then what right do they have to fire him over "Love" This is ludicrous!!

May 15 2012 at 6:17 AM Report abuse +1 rate up rate down Reply
2 replies to Sharon's comment

Class action law suit after class action law suit...........selling used stuff for new.......he's a scam artist......I hope he remembers the letter I wrote to him years he's getting what he deserves.

May 15 2012 at 6:43 AM Report abuse +2 rate up rate down Reply

Company policy when you sign on as an employee.

May 15 2012 at 12:01 PM Report abuse rate up rate down Reply

Big deal - Bill Clinton had a number of inapproriate relationships with women like Monica Lewisnki

May 15 2012 at 5:56 AM Report abuse +2 rate up rate down Reply
1 reply to Kevin's comment
Rothwell Gibson Wade

And kept his job, still get $100k a year for life, secret service, etc

May 15 2012 at 12:49 PM Report abuse +1 rate up rate down Reply

Get's laid! Get's $6.6 million! My only question : Are they hiring?

May 15 2012 at 5:49 AM Report abuse +4 rate up rate down Reply