| Best Buy Releases Results of Independent Investigation; New Chairman of the Board Elected |
Best Buy Releases Results of Independent Investigation;
New Chairman of the Board Elected
MINNEAPOLIS, May 14, 2012 - The Board of Directors of Best Buy Co., Inc. (NYSE:BBY) announced that on Saturday, May 12, 2012, it elected director Hatim Tyabji to succeed Richard Schulze as Chairman of the Company, effective at the conclusion of the annual meeting on June 21, 2012. Mr. Tyabji, currently Chairman of the Audit Committee, has served as a director since 1998.
When Mr. Schulze steps down as Chairman, he will become Founder and Chairman Emeritus, an honorary position. Mr. Schulze will serve out the remainder of his term as director through June 2013.
"Hatim's history of leadership combines technology, retail, financial and mobile experience at the most senior levels," said lead independent director Matthew Paull. "He has founded companies, chaired and served on boards and successfully led enterprises through long-term growth and change. The Board is grateful for his many years of service and is pleased to expand his role to Chairman."
"The story of Best Buy is a remarkable American success story," said incoming Chairman Hatim Tyabji. "Dick's leadership and vision changed the landscape of American retail, and he will forever be remembered as an iconic entrepreneur. We join Best Buy's 167,000 employees in thanking him."
The Board also publicly released the results of an independent investigation into personal conduct allegations involving former CEO Brian Dunn, who resigned in April. When these allegations, which were unrelated to the company's operations or financial controls, were brought to the Board's attention, the Audit Committee immediately initiated an investigation. Prior to the completion of the investigation, Mr. Dunn resigned.
When the Audit Committee was first informed of the allegations in mid-March 2012, it hired outside law firm WilmerHale to conduct an independent investigation. In the interest of transparency and accountability, the board made a commitment to publicly release the findings.
Key findings of the investigation include:
· The CEO violated Company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment.
· The CEO's relationship with the female employee demonstrated extremely poor judgment and a lack of professionalism, but the inquiry revealed no misuse of Company resources. The inquiry also revealed no misuse of aircraft.
· In addition, as part of the investigation, it was determined that the Chairman of the Board of Directors acted inappropriately when he failed to bring the matter to the Audit Committee of the Board of Directors in December 2011, when the allegations were first raised with him.
"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," said Mr. Schulze.
In light of these findings, the Audit Committee of the Board will launch an effort to review and enhance, if appropriate, Best Buy's relevant corporate policies and procedures. The goal of this review is to ensure a positive and consistent workplace environment for all employees at all levels.
In addition to electing a new chairman, the independent directors of the board have moved from a neutral position to a recommendation that the shareholders approve the shareholder proposal recommending declassification of the Board, which would require every director to stand for reelection on an annual basis.
"As a Board, we support the proposal for annual elections as an additional demonstration of our commitment to strong corporate governance practices. Each of us - with no exceptions - will be subject to approval by the shareholders on an annual basis," said Mr. Tyabji.
Investigation Methodology
The inquiry relied upon voluminous interviews, documents and other data. The inquiry included 45 interviews of 34 current or former employees; searches of e-mails and other documents on the CEO's and the female employee's computers; a review of relevant internal ethics complaints; a survey of personnel records; a review of the CEO's and the female employee's purchase records using their employee discount; an analysis of the log of products the CEO tested as product samples; and an analysis of the CEO's and the female employee's Company phone records. The Company did not have access to the CEO's complete personal cell phone records. In addition, the Company's Internal Audit staff performed an in-depth analysis of expense reports, records reflecting corporate use of aircraft, and records of the CEO's use of a Company credit card over a three-year period.
Mr. Dunn's Separation Agreement
At the conclusion of the investigation, the Company reached a separation agreement with Mr. Dunn that includes value reflecting the increased period for a non-compete from one year, the standard company policy, to three years. The separation agreement is comprised of a previously earned bonus for FY 2012, vesting of previously awarded restricted stock, a severance payment and an unused vacation payment.
Using the May 11, 2012, stock price for calculation, the estimated total value of the severance package is $6,639,311.
About Chairman Hatim A. Tyabji
Mr. Tyabji has more than 40 years of experience as a board member, operating executive and entrepreneur in various technology industry segments, including mobile communications, enterprise software, financial services and mainframe computing.
Since 2001, Mr. Tyabji has been Chairman and CEO of Bytemobile, Inc., a leading global provider of video optimization and traffic management systems for mobile network operators. He is also chairman of Jasper Wireless, Inc., which provides operators with cloud-based machine-to-machine (M2M) and device management services. Mr. Tyabji currently serves on the boards of Merchant e-Solutions, Touch Networks (Australia) and the Missile Defense Advocacy Alliance.
Previously, Mr. Tyabji was Chairman and CEO of Saraïde, Inc., a provider of wireless Internet and data services. He was also an early board member at Ariba, Inc. (Nasdaq:ARBA), a pioneer in e-commerce software for enterprises. From 1986 to 1998, he was Chairman, President and CEO of VeriFone, Inc. (NYSE:VFI), a global leader in transaction automation systems for multiple retail segments. Prior to VeriFone, Mr. Tyabji spent 13 years at mainframe manufacturer Sperry Corporation, where he rose from a project manager to President of Information Systems.
In addition to the chairing the Audit Committee, Mr. Tyabji serves on the Best Buy Board's Compensation and Human Resources Committee. His prior public company board experience includes Bank of America Merchant Services, Deluxe Corporation, eFunds, SmartDisk Corporation, Ariba and others. He has also served on the boards of numerous private companies and the Carnegie Institution for Science.
Mr. Tyabji holds B.S. and M.S. degrees in Electrical Engineering and an M.B.A. He is a graduate of the Stanford Executive Program and received an honorary doctorate from the State University of New York.
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Showing posts with label investigation. Show all posts
Showing posts with label investigation. Show all posts
Monday, May 14, 2012
Best Buy Releases Results of Independent Investigation; New Chairman of the Board Elected
News release:
Monday, April 30, 2012
Hitachi-LG Data Storage Inc. Executive Agrees to Plead Guilty to Participating in Bid-Rigging Conspiracies Involving Optical Disk Drives
Hitachi-LG Data Storage Inc. Executive Agrees to Plead Guilty to Participating in Bid-Rigging Conspiracies Involving Optical Disk Drives
Korean Executive Agrees to Serve Time in U.S. Prison
| U.S. Department of JusticeApril 30, 2012 |
WASHINGTON—An executive of Korean-based Hitachi-LG Data Storage Inc. (HLDS) has agreed to plead guilty and to serve time in a U.S. prison for his participation in a series of conspiracies to rig bids for the sale of optical disk drives, the Department of Justice announced today.
According to the four-count felony charge filed today in the U.S. District Court for the Northern District of California in San Francisco, Senior Sales Manager Woo Jin Yang, also known as Eugene Yang, conspired with others to suppress and eliminate competition by rigging bids for optical disk drives sold to Hewlett-Packard Co. (HP). Yang participated in the conspiracies at various times between approximately August 2006 and June 2009. Under the plea agreement, which is subject to court approval, Yang has agreed to serve six months in prison, to pay a $25,000 criminal fine, and to cooperate with the department’s ongoing investigation. HLDS is a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.
“Today’s charges demonstrate the Antitrust Division’s commitment to prosecute and deter conduct that harms American businesses and consumers,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue those who participated in these bid-rigging and price-fixing conspiracies so they are held accountable for their actions.”
Optical disk drives are devices such as CD-ROMs, CD-RWs (ReWritable), DVD-ROMs, and DVD-RWs (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.
According to the charges, from approximately August 2006 until February 2009, HP hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. According to court documents, Yang and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events. Yang and co-conspirators also exchanged information on sales, market share, and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
Including Yang, the department has charged four individuals and one company as a result of its ongoing investigation into the optical disk drive industry. On November 8, 2011, HLDS pleaded guilty in the U.S. District Court for the Northern District of California in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009. HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event. On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and agreed to assist the department in its ongoing investigation into the optical disk drive industry.
HLDS executives Y.K. Park, S.H. Kim, and Sik Hur pleaded guilty to multiple violations of the Sherman Act on March 27, 2012; April 17, 2012; and April 10, 2012 respectively. Park, Kim, and Hur are currently awaiting sentencing.
Yang is charged with violating the Sherman Act. Each count carries a maximum fine of $1 million and up to 10 years in prison. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.
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