Glen Stubbe, Star Tribune
Best Buy CEO could stay for long haul
- Article by: THOMAS LEE
- Star Tribune
- September 4, 2012 - 8:56 PM
When Best Buy Co. Inc. hired Hubert Joly as CEO last month, conventional wisdom held that the company would need to pay him a lot of money should he lose the job if Best Buy gets new owners.
After all, founder Richard Schulze, who is trying to buy the retailer for about $9 billion, has recruited former CEO Brad Anderson and former chief operating officer Al Lenzmeier to serve on his management team. Joly, 51, stands to receive at least $2.3 million plus bonuses and stock in that "change of control" scenario.
Joly officially started work in his new role this week and plans to spend the next few days working as a Blue Shirt employee at several stores in the Twin Cities area. But it's Joly's long-term future with Best Buy that has been the topic of much speculation.
Some say he could survive as CEO in a privately run Best Buy that is controlled by Schulze. For one thing, Joly possesses skills that Best Buy needs -- turnaround expertise and international experience. More importantly, Joly has close ties to Anderson, who has said he does not want be a long-term CEO again.
"Yeah, it does make sense," said Laura Kennedy, an analyst with Kantar Retail, a consulting firm outside of Boston. Anderson could help craft the strategy on how to grow sales, while Joly focuses on the more pressing needs of cutting costs and restructuring the company, Kennedy said.
Joly and Anderson's relationship goes back to 1999. At the time, Joly was CEO of Vivendi SA's video game unit, a major vendor to Best Buy. After joining travel and hospitality giant Carlson as CEO in 2008, Joly recruited Anderson to join the company's board of directors.
"I felt there was a lot of similarity between hospitality and retail," Joly previously told the Star Tribune.
Best Buy's pursuit of Joly did catch most everyone in the business community by surprise, including Anderson. The weekend before Best Buy announced it hired Joly, Carlson convened a board meeting to announce that Joly was leaving the company for Best Buy. Anderson, according to a source close to the situation, was asked to leave the room before the board discussed the matter.
Joly, though, said the two remain close.
"Brad and I have a very good relationship made of mutual respect and friendship," Joly told the Star Tribune recently. "I would not have asked him to join the [Carlson] board if that was not the case."
Should Schulze succeed with his buyout effort, asking Joly to continue as Best Buy CEO would provide the company with a measure of stability, analysts say. Joly could spare Best Buy the pain of recruiting yet another CEO if Anderson decided to retire again.
However, Joly's lack of retail experience would be an issue whether Best Buy remains public or goes private, said Kennedy, the Kantar analyst. Wall Street may prefer Best Buy stick with Joly for a while to ensure stability but, under private ownership, the company could reshuffle the leadership team at will without having to worry about a volatile stock price, she said.
And there's the matter of Schulze. While Anderson and Joly get along, Schulze has never met the Frenchman and apparently isn't eager to do so. The source close to the situation said Joly, after winning the CEO job last month, tried to contact Schulze, Best Buy's largest shareholder, but was rebuffed.
Then again, Schulze and Anderson, despite their current alliance, don't necessarily see eye-to-eye either. Since Anderson retired in 2009, the two men have not spoken to each other until Schulze contacted him about his buyout plans this year, sources said.
While the duo generally agree on Best Buy's problems and potential solutions, they have yet to work out important details, such as how much, if any, control Schulze would retain over a privately run Best Buy, according to two sources close to the situation.
Thomas Lee 612-673-4113
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