Best Buy’s CEO Succession Circus Continues
With alleged personal indiscretions, covert investigations and a founder’s potential meddling amid a crumbling business model, the search for Best Buy’s next CEO could make for a pretty good soap opera.
First, former CEO Brian Dunn resigned on April 12 under still mysterious conditions. The board is investigating whether he used Best Buy resources to carry on an inappropriate relationship with a younger female employee. But Best Buy was particularly criticized for not acknowledging the investigation into Mr. Dunn’s behavior until it received calls about it.
Some investors were then surprised to hear that it would take six to nine months to find a successor. Many expected a quicker hire.
"People question whether [management and the board] feel the urgency of the situation," Bradley Thomas, an analyst at Keybanc Capital Markets, told The Wall Street Journal. Recruiters also said not being able to immediately name a permanent CEO suggested either a lack of a succession plan or a lean existing executive bench.
That also leaves G. "Mike" Mikan, a former healthcare executive who is serving as interim CEO, to lead Best Buy’s efforts to reinvent the "big box" amid market share losses from the likes of Amazon, Apple and Walmart.
The plotline thickened earlier last week when reports surfaced that founder and chairman Richard Schulze was increasing his role with the company. The 71-year old, who handpicked the two CEOs who followed him and opted for insiders, could complicate the hunt for a new CEO, according to a Wall Street Journal report.
Last Friday, the board named a four-member committee to find the next CEO. The panel did not including Mr. Schulze. Promising an "open and transparent search process," Best Buy’s statement reiterated plans to post the CEO job opening on its website and disclose the name of the firm leading the search. Mr. Mikan was the only acknowledged internal candidate.
Best Buy also promised to release the results of its investigation of Mr. Dunn, which is being led by a former U.S. attorney and ex-enforcement director for the SEC. Mr. Dunn has yet to respond to the allegations.
Despite the distractions, Best Buy is expected to find a strong group of candidates eager to tackle the challenge. Pointing to how JC Penney was able to land Apple store’s former chief, Ron Johnson, David Nosal, CEO of executive search firm Nosal Partners, told the Minneapolis Star Tribune, "Best Buy is one of the most significant brands in retailing. Any candidate will have a significant opportunity to shape the brand for the future."
- Best Buy Board Appoints CEO Search Committee – Best Buy
- Best Buy’s Founder Not Part of CEO Search – The Wall Street Journal
- Founder Hovers at Best Buy – The Wall Street Journal
- Best Buy selects CEO search squad for Brian Dunn’s replacement – Los Angeles Times
- Best Buy opening up its CEO search – Minneapolis Star Tribune
- Best Buy to take 6-9 months to name new CEO – Reuters
Discussion Question: How would you evaluate the handling of Brian Dunn’s departure by the Best Buy board as well as its search for a new CEO?