Posted at 9:18 AM on May 14, 2012
by Paul Tosto
Filed under: Retail
Richard Schulze, one of the great Minnesota business success stories, praised in his career for doing things the right way, today said he would step down as chairman of Best Buy, the company he founded, for doing the wrong thing.
An internal Best Buy investigation released this morning said Schulze knew CEO Brian Dunn was engaging in "in an extremely close personal relationship with a female employee that negatively impacted the work environment," but failed to tell the board's audit committee.
Best Buy said:
It was determined that (Schulze) 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.The company said Schulze will serve out the remainder of his term as director through June. But it's another blow to Best Buy, a company already struggling with the future of electronics retailing.
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.
The report accused Dunn of "extremely poor judgment and a lack of professionalism," but found no inappropriate spending of company funds.
We'll be reading through and posting documents and information today. But here's the conclusion of the Best Buy internal investigation:
We find that the CEO violated Company policies with respect to inappropriate conduct, conflicts of interest, and vendor gifts, but we find no evidence of misuse of Company resources. As the CEO of a publicly held company, he was in a position in which his leadership skills were critical to his capacity to oversee approximately 167,000 employees and to maintain the confidence of shareholders and investors. Here, the CEO developed a close personal relationship with a subordinate that negatively impacted the work environment. Such behavior was disruptive and reflected poorly on the CEO's judgment.
Further, by unilaterally confronting the CEO in December 2011, the Chairman failed to act in a manner consistent with the Audit Committee's mandate and good governance practices, and he created serious risks of employee retaliation and Company liability.