When it comes to Corporate Governance, Best Buy (ticker: BBY), can’t get out of it’s own way.
This weekend’s news that Best Buy’s Board of Directors is investigating allegations that CEO Corie Barry had an inappropriate romantic relationship with a former Best Buy executive is a bit of a head-scratcher.
We have seen this Best Buy movie before. Former Best Buy CEO Brian Dunn resigned in 2012 after engaging in an “extremely close personal relationship with a female employee that negatively impacted the work environment” per Best Buy’s 2012 Audit Committee investigation report (read HERE).
Mr. Dunn – who began his Best Buy career in 1985 – was replaced as CEO by Hubert Joly who now serves as Best Buy Chairman. Mrs. Barry became Best Buy CEO in June 2019. Barry started her Best Buy career in 1999 and was named CFO in June 2016.
If the allegations are true, investors can reasonably ask the questions:
- “Shouldn’t Mr. Joly have known that something was out of the ordinary with his CFO, especially if she was engaging in an inappropriate relationship with a Best Buy colleague? (former SVP, Karl Sanft).”
- “If Mr. Joly knew, why didn’t he report it to the Board – or did he?”
- “Was Sanft’s leaving the company Joly’s idea of resolution?”
If the allegations are found to be true it would not be surprising if the Board forced out Joly and Barry. If BBY Board members knew and decided not to act they too may turnover.
Further, this demonstrates the importance of a Board running a thorough due diligence process on CEO candidates prior to naming a CEO. Simply because a CEO candidate is a company insider ought not to exclude that person from the due diligence process.
Observing from the outside in, Best Buy lacks a winning culture.