Devil’s in the details in Best Buy agreement

March 26, 2013

By now, you’ve probably heard that the long-running saga between Best Buy (BBY) and its founder and former Chairman Richard Schulze has been resolved. It was all over the news yesterday and there’s some good background in this Star-Tribune story. In a nutshell, Schulze, who owns about 20% of Best Buy’s stock, will return to the company as Chairman Emeritus. Two former Best Buy executives — Brad Anderson and Al Lenzmeier — were picked by Schulze to join the company’s board and Schulze will continue to “share your wisdom, insight and passion” about Best Buy in his new role. He’ll also collect up to $2.125 million as a consultant over the next year and get an additional $150,000 in salary, neither of which seem particularly necessary. Like a lot of former executives, Schulze will also get office space at the company and administrative support.

But after taking a closer look at the agreement that was attached to the 8-K that Best Buy filed yesterday, we were fascinated with some of the details that we haven’t seen reported. For example, the agreement spells out that Schulze will receive monthly financials “as soon as practicable after they become available following month’s end” and that CEO Hubert Joly and CFO Sharon McCollam will meet with Schulze on a quarterly basis. Schulze will also have an opportunity to provide his input on any new directors that the company might appoint. That’s the more serious stuff.

Then there’s the more picayune stuff that was clearly important to Schulze. The agreement spells out that as Chairman Emeritus he’ll have “use of your office (or a replacement office provided at the Company’s cost and reasonably acceptable to you)”. The wording makes it sound like Best Buy might have left Schulze’s old office intact — much like a parent leaves a child’s bedroom in place after they head off to college — when he stepped down last June. While Schulze is free to use that office, he needs to give Joly a heads-up when he’s planning to be there. Here’s how the agreement describes it: “As a courtesy, you will notify me in advance when you intend to visit the corporate headquarters.”

There’s also an interesting sentence in the agreement about Best Buy’s corporate history. Here’s how the agreement puts it: “the Company will depict in the corporate headquarters important milestones throughout the Company’s history, substantially as has been displayed in the past, which will be updated from time to time for recent events as appropriate.” The way this is worded makes it sound like the company either removed or was planning to remove some sort of display that traced Schulze’s path from owning a single store in St. Paul to creating an international electronics chain. In any event, it was clearly important enough for the display to be spelled out by lawyers in an agreement.

 

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