G. “Mike” Mikan
, Star Tribune
Best Buy headquarters in Richfield.
Glen Stubbe, Star Tribune
UnitedHealth vet Mikan asked to steady Best Buy
- Article by: DAVID PHELPS and JANET MOORE
- Star Tribune s taff w riters
- April 12, 2012 - 8:43 PM
As a basketball player, G. "Mike'' Mikan III, Best Buy's interim CEO, was known for being prepared, tough and competitive, attributes that should serve him well as he takes the lead of the struggling electronics giant.
The former UnitedHealth Group Inc. executive, who hails from basketball royalty, will lead Best Buy just as it begins a massive retooling of its business model after the sudden departure of CEO Brian Dunn, who resigned Tuesday amid a company probe relating to his "personal conduct.''
The "G" in Mikan's name stands for George, as in George Mikan, his grandfather and the late Minnesota professional basketball legend.
Mikan, who turned 41 on Monday, has been on the Best Buy board of directors since 2008 and knows Chairman Richard Schulze. In addition to his tenure on the board, Mikan also is a graduate of the University of St. Thomas, where the business college's school of entrepreneurship is named after the Best Buy founder, who remains the company's largest shareholder. Both men call Edina home.
"As we move forward we are very pleased to have a strong leader with Mike Mikan's credentials as interim CEO," said Schulze in a statement announcing Mikan's promotion. Mikan will remain on the board while a formal search for a new chief executive takes place.
Best Buy noted in its news release that Mikan has "strong financial and operational expertise, as well as public company leadership experience." Mikan was not available for an interview Tuesday.
Sales at the Minnesota-based big-box retailer have remained flat for three years at about $50 billion. Meanwhile, online competitors such as Amazon.com have taken market share from the company, which has responded with plans to close 50 stores and lay off thousands. Best Buy, the third-largest public company based in Minnesota, has about 180,000 employees worldwide.
Analysts who follow the company say Mikan can help provide stability in the wake of Dunn's surprising departure, but they predict someone else be selected to take the job permanently.
"Mikan's a proven leader, but I think you need to bring in fresh blood and fresh ideas," said Matt Arnold, an analyst with Edward Jones & Co. "Best Buy can take this opportunity to look everywhere to find someone who is relevant to the marketplace."
Dave Brennan, professor of marketing at St. Thomas, agreed.
"Mikan is a financial guy. In the longer term, the real issues are marketplace issues," said Brennan, co-director of the Institute for Retailing Excellence. "They need to look outside the organization for someone familiar with Internet retailing."
Mikan's professional credentials were burnished in the big health care provider's finance department, which he joined in 1998. After assuming a series of positions with increasing responsibility, Mikan was named a finance vice president and chief financial officer in November 2006, a job he held until January 2011, when he was tapped to head the company's fast-growing Optum unit, a $27 billion health information and technology business.
When named to head the Optum unit, analysts speculated Mikan could advance to the top spot at UnitedHealth. Ana Gupte, analyst at Sanford C. Bernstein, said at the time, "Mikan's move to head up health services is significant. They are giving him operating experience to develop him."
Dave Shove, health care analyst with BMO Capital Markets, calls Mikan "a pretty capable guy."
"He not only understood the money side of the ledger, but also how the business worked -- the products, customers, the trends. He's definitely not a green-eyeshade kind of guy. Whether that will translate to computers and phones at Best Buy, I have no idea."
But in a move that left analysts wondering, Mikan abruptly left UnitedHealth in July 2011. UnitedHealth announced that former Fidelity Investments executive Larry Renfro would take over Optum, after a relatively brief stint with the health care company. That transition was part of UnitedHealth's ongoing strategy to build two distinct business platforms -- health services under the Optum brand and traditional insurance and other benefits under the United Healthcare umbrella.
Mikan was out after only six months at Optum.
A news release at the time said Mikan was "leaving to lead a private equity company." The firm was not named, and its identity is still a mystery.
In a statement, UnitedHealth CEO Stephen Hemsley called Mikan "an extraordinary talent who has made numerous contributions of incalculable value to our enterprise over the years. ... While we will miss him as a friend and colleague, we understand his desire to move in a new direction."
At the time, several analysts viewed the news negatively. "The main negative here is not that there was a surprise change in management, but rather a loss of one of the strongest managers at the company," Barclays Capital analyst Joshua Raskin wrote in a research note to investors.
Raskin further speculated that the executive shuffle was "reflective of internal difficulties at UnitedHealth Group."
Mikan was well-compensated for his more-recent leadership roles at the Minnetonka-based company. Between 2007 and 2010, he earned about $12.5 million in total compensation, according to securities filings.
Like Best Buy, the Mikan name is a home-grown institution. His grandfather, George, was a Minneapolis Laker who is known as one of the pioneers of pro basketball. He led the Lakers to several championships (the franchise later moved to Los Angeles) and was instrumental in forming the Minnesota Timberwolves.
Mike Mikan's father, Larry, was a star University of Minnesota Gophers basketball player. The youngest Mikan played basketball at Benilde-St. Margaret's.
In a 1989 interview with the Star Tribune, comments by Mikan's high school coach seemed prescient: "He knows the game and he's thorough. That's a big advantage. If he makes a mistake, it's because he's aggressive. But we can use him to guard one of the opponent's better players because he's heady and doesn't get into foul trouble. If anything, he's too tough on himself. That's his competitiveness."
Staff writer Patrick Kennedy contributed to this report. David Phelps • 612-673-7269 Janet Moore • 612-673-7752
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