Electronics retailer Best Buy said Monday that it had elected director Hatim Tyabji to succeed Richard Schulze, after the board found that Schulze had not reported former chief executive Brian Dunn's relationship with a female employee.
On April 10, Dunn resigned, after, in the words of the company, "engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment". Director G. Mike Mikan served as interim CEO while the retailer conducted a CEO search.
Schulze will retain the titles of Founder and Chairman Emeritus, honorary positions that will be his to keep until 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," Schulze said in a statement. "I understand and accept the findings of the Audit Committee."
Best Buy said it would pay former CEO Dunn a total of $6.6 million in severance, consisting of a $1.1 million fiscal 2012 bonus, $2.5 million in stock, a severance payment of $2.8 million in cash, and $106,742 in unused vacation time.
Best Buy's inquiry of Dunn included 45 interviews of 34 current or former executives, including emails and phone records of both Dunn as well as the unnamed female employee. (Dunn's personal cell phone records were not obtainable.) The company also examined which products both evaluated as "samples," Dunn's use of corporate aircraft, and expense reports, the company said.
The audit found Dunn violated company policy in his relationship with the employee, but did not misuse company resources.
Tyabji, for his part, chaired the Audit Committee that investigated Dunn and Schulze, and serves on the company's Compensation and Human Resources Committee.
"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 board of directors also said that it will ask shareholders to approve a proposal that would "declassify" the board, asking shareholders to vote to approve every director, every year, without exceptions.
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